Laundromats and Legal Entities - part one: Limited Companies

We begin our analysis of how legal entities, in locations which have transparent corporate registers can still be used to mask ultimate ownership and control while still providing a veneer of respectability.

In this first part we look at Limited Companies and their Directors, Shareholders and Persons with Significant Control, to see how each of these can look plausible but still need further investigation.

Transcript

spk_0:   0:12
Hello and welcome to Episode

spk_1:   0:14
two of Season two of the Dark Money files, which we shine a light into a murky world. I'm right, Blake. With me is my co host friend, business partner, Grand Barrow. How about Graham High? Right. I'm looking forward to this episode. Crime. Oh, what's that right. But firstly, because it's a proper deep dive into empirical data

spk_0:   0:36
are you like data? Don't you write

spk_1:   0:38
anything you can encode into an Excel spreadsheet is okay with me,

spk_0:   0:42
and I should mention for the benefit of any of our listeners who don't already know this, that rate isn't just a master were excel on. I have honestly lost count of the projects I've worked on with you where where you will be asked up repeatedly for what's become known as a rape button. Once clicked, will work all sorts of magic normally in V B A, which, for those of you don't know, is the visual basic for applications, which is the stuff that runs behind all those nice little icons you click on on that ray button will produce exactly the answer required.

spk_1:   1:17
Well, you're very current. Graham Away said that if I was only allowed one computer application that I had to use for everything. It would be excel.

spk_0:   1:26
Yes. And as we mentioned in our last episode on honeymoon lay, those skills are still being put to extremely good news. Indeed, out, Ray, you just said, firstly, in respect to the use of empirical data, so that suggests that there's at least a secondly as well.

spk_1:   1:43
Well, yeah. There is another reason I've been looking forward to this one on DH. It's that I'm a sucker for nostalgia and thinking about companies. House takes me back to an earlier time.

spk_0:   1:54
Oh, how so?

spk_1:   1:56
Well, Graham, in the summer of 1983 I just finished my own level exams and was looking forward to my 16th birthday. I was also keen to spend the very long summer holiday earning some money.

spk_0:   2:08
Nothing wrong with that. So what did that lead to?

spk_1:   2:11
Well, I got a job. I spent the summer working for a company search in formation agency in central London. I was based just a couple of 100 metres from the Old Street city road round about

spk_0:   2:21
Oh, I know it. Yeah, that's just a stop or two up the northern line from the very heart of the city of London, isn't there?

spk_1:   2:27
That's right. Grain on the location of that business was no coincidence, because from my office you could throw a stone and have a good chance of hitting companies House, which in those days was at the roundabout end of City Road. Ah,

spk_0:   2:42
did you visit Cos

spk_1:   2:44
I did Graham twice a day, sometimes more. It was my job to collect all the search requests that had come in filling request forms and drop them at the counter at Companies House, where later in the day I would return and get handed copies of the company filings, which I then take back to my employer and distribute.

spk_0:   3:03
So this is 1983. So were they want paper documents?

spk_1:   3:07
No great microfiche.

spk_0:   3:10
Oh, well, that's a So I think you might have to explain for our younger listeners, right?

spk_1:   3:16
Of course, microfiche was quite old tech even in the eighties, but it's how companies house archived the reams and reams of company documents that they had to look after. Given company's records, its memorandum and articles of association, various other filings and regular returns would all have been photographed miniaturised and printed in negative onto little sheet of blue tinted acetate. The size of index cards. Many a four pages to a single card. So's cheat. You place one of these cards into a special machine called a Microfiche Reader, which would shine a light through the acetate and projected image massively enlarged onto a thin plastic screen. You've moved the acetate around by hand to navigate through and between different documents shown on the one acetate.

spk_0:   4:11
Hi tech. Yeah, it sounds like you were a nervy forerunner of the company's House Web service, Right?

spk_1:   4:19
That's exactly what I was. Great. So imagine my surprise that over 35 years later I'm back where I started my career. Except now my job has been taken by some HTML code an online database.

spk_0:   4:32
Well, I'm I'm sure you did it better.

spk_1:   4:35
I can assure you, Graham, I didn't very well. Yes. The other reason I'm looking forward to this episode is that I think lots of our listeners will find it a really useful guide and training tool for how entities who used in laundromats to discos ownership but at the same time helped them on Earth. The clues that will signal the possibilities of criminal activity.

spk_0:   4:59
Yeah, you know, I kind of thinking that I don't actually know anyone else with whom I could sit for 20 minutes or so and chat about the finer points of company registration data recorded on the company's house website and have fun doing so

spk_1:   5:14
well, I'm not sure that says anything positive about wait to get started. I suppose, as I understand it, we're going to look in detail at three different entity types Liberty companies, limited liability partnerships and Scottish Limited partnerships.

spk_0:   5:31
Yes, and what we're going to do is use some specific examples that have been drawn from companies House to do so. But as usual, can I just add importantly, the normal caveat that we're no in any way alleging that any of these companies were going to talk about today or in other episodes are in any way involved in criminal activity?

spk_1:   5:50
Correct. And that's important. We're just using them as good examples of the type of behaviour that other Mohr criminally minded operations can utilise this part of their endeavours

spk_0:   6:00
Exactly. So let's start with limited companies Ray over

spk_1:   6:04
to you, but I can't help noticing crime that the example he chose for me to use as one of the most unpronounceable names have ever seen.

spk_0:   6:12
I like a challenge.

spk_1:   6:14
Well, okay, then here goes the company we're going to talk about is cold. Do breath I f e a lie. Yo, cool till okay. No, on DH. Yes. There genuinely is a UK LTD. Company registered under that name as one word.

spk_0:   6:35
Yes, and it just almost makes this everything worthwhile. Just just mentioning it.

spk_1:   6:40
Well, that's easy for you to say less so for May. Now, before we carry on and look at this company in particular. Should we have a general chat about the use and abuse of limited companies?

spk_0:   6:50
Yes, let's. And I think it's fair to say that they are not so commonly found directly involved in laundromats, although some of them are, but much more so as the PFCs for limited liability partnerships and Scottish limited partnerships that are directly involved.

spk_1:   7:05
Now, PSC let me explain what that means. A P ECE or person with significant control is the equivalent of a known rule controller of the legal entity. In the case of a limited company, it would be a basic level. Anyone who owns Mohr than 25% of the shares or otherwise exercises control say, through voting rights of Mohr than 25% off the company.

spk_0:   7:32
Exactly, but confusingly, the PFC can also itself be illegal entity. But in order for it to qualify as a PFC, that legal entity must also be subject to an equivalent transparency regime or listed on one of the very few stock markets. And it's probably worth adding that equivalent transparency regimes are Israelis hen's teeth in the world on DH Pretty much UK and New Zealand are the only ones are properly transparent.

spk_1:   8:00
Absolutely so. The basic idea is that where you encounter a company which might otherwise seem like a opaque structure, the general principle is you've got to be able to understand who owns that company. In other words, the individual people who own that company are the exception. Andi exception to that, then, is that that you can have another company in there is that owner provided that that company itself is transparent about the actual human beings who own it on the way that we ensure. That is by making sure that that's a company that subject to transparency in its own right

spk_0:   8:48
spot on. Absolutely right.

spk_1:   8:49
Okay, Now it's worth pointing out straight away that there are a lot of companies on the company's house website who have declared PFCs that don't meet those requirements that that have PFCs who are companies that on in an equivalently listed regime, for instance. And the reason that they get away with that is because there's very little due diligence performed on the filings, which had just accepted by a large without checking.

spk_0:   9:21
That's exactly right.

spk_1:   9:22
Mmm. So to recap, while UK LTD companies are sometimes seen in major money laundering schemes there more often seen as an intermediate owner over UK partnership

spk_0:   9:36
Well, yeah, but that's okay, isn't it? Given that the UK has a disclosure requirement for limited companies persons with seeking control?

spk_1:   9:44
Well, you'd think so, wouldn't you? Mmm. Let's talk share way about our Icelandic volcano company.

spk_0:   9:52
Okay, Cool.

spk_1:   9:54
It was incorporated on the 10th of January 2018 a little over a year ago, as we recalled, So the first accounts were filed on 27th of February 2019 this year

spk_0:   10:07
on Were they interesting?

spk_1:   10:09
Well, they were dormant. Grey and they were accounts for a dormant company. The company's registered with a sick code of 99999 So that's not surprising.

spk_0:   10:21
Okay? Should I quickly explain what a sick code is before we go on? Yeah. Good idea. So, six or standard industrial classification codes are used by companies, house and other government bodies to classify the nature of the business activities of the companies that's registered here in the UK

spk_1:   10:37
So they're like snakes and nice coats.

spk_0:   10:40
Exactly. So next stands for the North American Industry Code system on nice. Deep breath stands for the more cattle day's activity. Economic don't like, um, you know, tae European.

spk_1:   10:53
So not just may this week with the dodgy accident

spk_0:   10:56
s. Oh, right. Sorry about that. Importantly, the industry's covered by these different codes. Do know always correlate. So just because the companies has a next coat with some industry doesn't mean it will exactly match. It has got a sick of our may scare.

spk_1:   11:14
Okay, So back to the volcano. Turns out it's a dormant volcano.

spk_0:   11:22
You just couldn't resist. That could

spk_1:   11:25
too good an opportunity to resist, I'm afraid.

spk_0:   11:29
Moving on. What do you read into that

spk_1:   11:33
I've given the large number of companies very similar in structure to this one were all created at the same time. I suspect these are off the shelf companies designed to be sold on on opportune moment.

spk_0:   11:45
Andi, Sorry to interrupt again, right, But I think we ought to explain what we mean by on off the shelf company.

spk_1:   11:51
Yeah, that's fair. An off the shelf company is one that's already been incorporated, usually by a company formation agent. Often, people liked it by an off the shelf company because it saves waiting for the paperwork to come through from setting one up from scratch. But also there could be an advantage in having a company that already has some age, by which I mean it's been in existence sometime. Other companies are often very nervous about dealing with brand new companies

spk_0:   12:20
on DH, having a special classification as dormant.

spk_1:   12:24
When you buy an off the shelf company, the ownership passes to you by transferring the shares of the company. However, you also inherit the debts of the company as well. So buying a dormant company provides reassurance that there aren't any hidden unpaid bills owed by the company. You're buying, which may come back and bite you at a later date.

spk_0:   12:45
Got it? So? So we think these companies are probably being formed to be sold on to other clients.

spk_1:   12:51
Exactly. Mind you, the way they're structured makes for quite interesting reading. Go up well. The incorporation document for the volcano company, which is available from companies house as a PdF, includes both the directors and share holders. Details

spk_0:   13:09
right, which is part of the transparency requirements put in place by the UK government and which eventually will be mandatory in some way or other throughout the U following specific You legislation

spk_1:   13:21
Correct again the directors of this particular company, or what I guess to be the company formation agents, along with a lady named Melissa Keisha da Silva Miller.

spk_0:   13:32
Well, that's a fantastic

spk_1:   13:34
Oh, you you don't know the half of it, Graham. Well, okay, But before we come Teo the other exotic names in this case, let's just have a quick chat about the company's service provider, who's also acting as company secretary. It's worth pointing out that they are or have also bean company secretary to another 780 for you, Carrie Entities, 258 of which is still active.

spk_0:   14:01
Okay, well, they certainly sound that Company formation agents.

spk_1:   14:05
Yes, but this particular company is also classified as a non trading company.

spk_0:   14:11
Oh, is that good or bad or

spk_1:   14:14
what? Well, it's possible that they simply use the company as a nominee secretary while all the payments go through another company which is trading. Sadly, I can't find any trace of them on the Internet. But their companies house filings, reveal their owned and run by someone whose name crops up repeatedly on Laundromat entities.

spk_0:   14:34
Okay, so I mean, I know we're going to be careful around who we associate with Laundromat. So should we just leave that there and go back to the shareholders?

spk_1:   14:44
Yes, there's no suggestion of any negative news with them.

spk_0:   14:49
Good. So who are they?

spk_1:   14:52
They are the aforementioned mother's silver Miller, along with Juno Oh, Javi, Sam, Allah Grant. And that's just one person, by the way. Misha Notre, France, Spain and Kem Lynn. Deborah Gentle.

spk_0:   15:09
That's quite a selection. Where did they come from?

spk_1:   15:14
Two are from some Vincent and the Grenadines and two from Grenada.

spk_0:   15:20
I know I keep saying this, but wow, that's not exactly who are, frankly where you'd expect the shareholders of a UK LTD. Company to come from. Is it

spk_1:   15:32
no, particularly given that those are territories in, which is actually quite easy to set up a company locally.

spk_0:   15:40
So what do we presume they are, simply nominees?

spk_1:   15:44
Well, Graham, I'm not sure we can assume that.

spk_0:   15:48
What did you say that?

spk_1:   15:50
Because the company is also obliged to name a personal persons with significant control. The Pierce's we were talking about on that does have to be whoever actually owns or controls the company. No, just a nominee. That's the point of the requirement of a No, they haven't Graham. So what we have to assume from that is that they're relying on the fact that there are four shareholders now. Four shareholders means that each of them would own an equal 25% of the entity exactly 25% which means that they never triggered the requirement to talk about a PSC because of PSC is only required to be named when that person share exceeds 25% So often. When you see for equal shareholders in a company, it's a neat way of dodging, having to name a PSC.

spk_0:   16:47
Mmm mmm mmm

spk_1:   16:49
mmm. Mmm. So thinking about these four folk from the Caribbean, we can reasonably assume them. Tio actually own the company. Of course, if it's truly doormen and not trading, it isn't really worth anything. And therefore, it's reasonable that for folk from Grenada and the Grenadines should own it. Onda a whole bunch of other companies, most of which are also named after volcanoes.

spk_0:   17:19
So, like would be rather more interesting if we were to discover a similar company which wass actually trading.

spk_1:   17:27
Yes. And I believe I found one of those. Also, have you? Yeah, it's called Poor Toro Trade Limited.

spk_0:   17:37
That's not a volcano, is it?

spk_1:   17:40
No. Poor Taro is the name of a beautiful black marble with golden veins running through it. Paul Toro Trade was formed on the 24th of January 2018 exactly two weeks after our volcano company, which I'm not gonna name again. Okay, that's interesting. Well, yes, it has exactly the same Secretary, director and shareholders. The code five nines. Graham. It's a dormant company. In fact, every aspect of its filings at Companies House are identical to the previous company.

spk_0:   18:15
I thought you said it was trading.

spk_1:   18:18
Well, that might have been stretching What I know a bit further than is strictly provable. But it's definitely in a different category to the previous company. Even if it's sick, Code is the same.

spk_0:   18:28
But you just said its entire filing history is the same. So how can it be different?

spk_1:   18:34
Because it's the PSC for UK limited liability partnership.

spk_0:   18:39
Is it? So this strange entity, which has a UK LTD. Company as its secretary and a lady from the Grenadines as its director on the same lady, along with three others from other Grenada or the Grenadines as its shareholders owns or controls a UK limited liability partnerships?

spk_1:   19:00
Yes, it does. I thought it will become even order when you start to look at the L L P that it owns. Really? Mmm mmm. Mmm. Yeah, really. But I think we've probably reached a point at which we should We should break and let our listeners get on with their day. Maybe you'd liketo have a look into this l l p and explain it to our listeners in the next episode.

spk_0:   19:28
I will definitely do that, Ray.

spk_1:   19:31
In the meantime, though, just one thing that I think we could usefully leave them with crime whenever talk turns to companies house, which it does surprisingly often, I always think about the frankly embarrassing steps that the UK government took seeking to prevent its ridicule at the laxness of companies. House.

spk_0:   19:56
Yes, we talking about poor Oh, Kevin Brewer.

spk_1:   20:00
That's who I was thinking off. Yeah,

spk_0:   20:03
yeah, that's it's sad, isn't it? That I mean, the UK have legislation that says that if you file knowingly fake details and companies house that you could be fined and I think we've probably seen a good few which we would think are probably fake and nothing's ever happened. So you want to tell people after poor old Kevin.

spk_1:   20:23
Yeah, yeah. No, I'm glad. Toe. Well, Kevin was also a little bit frustrated with the obviously false disclosures that have been made to Companies House. So he set out to demonstrate how easy it wass to post patently false information on companies House.

spk_0:   20:44
Probably we're saying that Kevin Brewer is himself a company formation agent who believes passionately in doing the job properly with the correct due diligence. So he had a really interesting pointing out the others were not doing quite such a good job.

spk_1:   21:00
Oh, yeah, He's definitely one of the good guys.

spk_0:   21:03
Did he? He created a company. Certainly one with Vince Cable. Ahs. The director didn't.

spk_1:   21:09
Yes, absolutely.

spk_0:   21:10
Yeah. What happened to him?

spk_1:   21:12
Well, you would have thought that that would have been quite easily stopped at the gates of companies House. Ahs being ridiculous. It wasn't. It went through. It ended up on the database. So Kevin, increasingly frustrated. Not only that, he had been able to get that through the gates, but nobody seemed to have spotted it or wanted to do anything about it. Blew the whistle on himself effectively on DH, reached out to the authorities and said, You look what I've been able to do.

spk_0:   21:43
And they showed their appreciation boy

spk_1:   21:46
by prosecuting him under the law that we were just talking about. Kevin received a fine for his travels on DH. Obviously all of the public censure that accompanies that

spk_0:   21:57
Ondas faras we're aware. I'm pretty sure I'm saying he's the only person ever to have been prosecuted under that particular

spk_1:   22:06
Extraordinarily. That is correct, Andi. Actually, when we gather back again next week for the second episode, I think we'll be able to share with our listeners some insight into exactly what was frustrating. Kevin

spk_0:   22:25
and I will be diligently researching that episode as I get through the next week.

spk_1:   22:31
Looking forward to it.

spk_0:   22:35
Thank you for listening to this episode of dark money violence. We could if you would like to listen to you two episodes, please subscribe through fighting, fighting like your normal cars.