This follows a new investigation based on leaked documents showing the alleged role of a United Kingdom-based company formation agent in setting up and managing firms linked to fraud and criminal activity in multiple countries.
Leading anti-corruption organisation, Transparency International, has warned world governments against relying on the assistances being rendered by corporate service providers.
This follows a new investigation based on leaked documents showing the alleged role of a United Kingdom-based company formation agent in setting up and managing firms linked to fraud and criminal activity in multiple countries.
TI said that countries that rely on such firms for identifying company owners and vetting their sources of funds are at greater risk of money laundering and corruption.
Leaked documents obtained by TI in the investigation revealed the company’s plans to set up next-generation, privately-run offshore zones in poor countries with weak institutions. A big selling point? They would be beyond the reach of domestic and international authorities.
Maira Martini, Research and Policy Expert at Transparency International, said, “Company formation agents have been at the heart of scandals like the Panama Papers and Paradise Papers.
“This investigation appears to give us another example of how some corporate service providers have allegedly facilitated money laundering and criminal activity.
“Formation agents need to face tough consequences when they fail to conduct proper due diligence on their clients.
“Yet some countries have actually chosen to rely almost entirely on such agents to identify the real people behind companies and vet their funds. This is like the fox guarding the hen house.
“Far better would be public registers of company ownership, so that companies set up by dodgy firms can be identified and scrutinised by law enforcement, journalists and civil society.”
Corporate Service Providers are organisations that provide support services to business.
They find solutions to the customer problems and the services they render include financial and banking services, business advisory services, tax and investment services.