IS YOUR NEW BANK CLIENT USING A SHELF COMPANY TO GIVE YOUR COMPLIANCE DEPARTMENT A FALSE SENSE OF SECURITY?

A SHELF COMPANY is a shell company that has been formed by a financial services provider, or attorney, a number of years ago, and sold to a client, who then uses it to appear to have an established business, with a track record, and is therefore low risk for AML compliance purposes. Money launderers and financial criminals love shelf companies, for they allow them to construct a bogus corporate profile regarding their shell company.

When I was engaged in the practice of money laundering, I would seek out the providers of these "aged" entities, first making sure they had not been dissolved for the failure to file annual reports and pay fees. A premium is charged by the vendors, because they must absorb the costs, sometimes for several years, of upkeep, always filing before deadlines, and using frontmen as officers & directors.

Later, as a working compliance officer, I wrote financial crime articles on the side for the UK company Complinet, which is now a part of Thomson Reuters. I had a regular feature that I called "Shelf Watch," on which I identified the names of all the shelf companies, presently or formerly being offered for sale in a different offshore tax haven each week. The purpose was to alert compliance officers, so that they might conduct themselves accordingly, should they learn that a bank client's corporate entity was a shelf company, and therefore an immediate candidate for enhanced due diligence, and often even account closure.

I noted that many of these dodgy purveyors of shelf companies weren't easy to find using common search engines, and I often had to resort to multiple searches, in many places, to locate specific companies and their offerings.

Today, learning that your new lucrative bank client is really just a shell company that was cleverly formed years ago, and may be engaged in financial crime, remains an important element of EDD. The difference now is that you can find even the most obscure list of shelf companies, on a site that is impossible to find using conventional search techniques, by employing an artificial intelligence-equipped platform, to dig out those lists and perhaps find your target corporation among them. AI can find data that your legacy searches never could; Use it.