Companies House, my Russian virtual squatter and I
If the UK Companies Register is to be believed, my family and I share our accommodation with a Russian in his forties. For a while, our office served as an office for his start-up, which he created last year, and of which he is the sole shareholder.
The problem is, that is not true. We have never heard of “the Russian”. But evicting our virtual squatter has proven to be complex and costly.
Trawling in public records is the backbone of my work as I follow the world’s money flows for evidence of financial fraud or accounting acrobatics. I am therefore aware that the records of the UK companies register, Companies House, contain errors and lies.
Questionable deposits abound on the registry. Was Christ, Holy Jesus with a residence in paradise really a director of Weight A Minute Limited for a year? Why has a dormant company – more recently named MAD Group Limited – changed its name nearly 250 times since its inception six years ago before being voluntarily deregistered?
These are just a few of the quirks Graham Barrow, anti-money laundering expert and host of the Dark Money podcast, has encountered. “It’s really hard to know what crimes by commission and crimes by omission are,” Barrow says. “Is it deliberate or accidental?” “
Britain has a long history of attracting money laundering criminals, and abuse of the business register is rife. Search by International Transparency has listed at least 929 UK shell companies used in corruption and money laundering cases which it believes could cost the global economy up to £ 137 billion.
What I discovered about our alleged tenant certainly raised questions. Following a trail of public archives, I found an individual with the same name and the same date of birth as far as the Russian city of Nizhny Novgorod. There he chaired at least half a dozen companies, most of them dissolved. His UK company has set up a now defunct website selling online gaming artifacts – another red flag. Online games have become a popular way to launder money, with players transferring in-game items that can be turned into tangible currency.
Starting a business in Britain is cheap, costing just £ 12. However, Companies House is not responsible for verifying the veracity of the information filed. Although the government is aware of the problem, there have only been five prosecutions for providing false information to the registry. Ironically, the first was an activist who registered a company in the name of former business secretary Vince Cable in an attempt to expose loopholes in the registry.
There is little data on how often addresses are used fraudulently or misinformation, but it has become a growing problem. Removing a manager’s address is relatively straightforward. But getting rid of false shareholder information requires hiring a lawyer and obtaining a “properly drafted court order,” according to Companies House. The burden of proof – and legal fees – falls on the person whose address they used.
The Russian company was due to be struck off the register earlier this year. However, according to Companies House records, “the cause has been shown” why the company should not be shut down. This does not appear to have included verifying the legitimacy of the owner’s address.
That may soon change. After years of near impunity for criminals, the government consulted in 2019 on options to increase corporate transparency and tackle economic crime. A new consultation that closed in February sought advice on reforms that would give powers to the registrar to verify the information provided to Companies House.
Ben Cowdock, principal investigator at Transparency International, says the proposed changes are only part of the road to solving the problem. The crackdown on rogue training agents is beyond the reach of current reforms. Another concern is how quickly changes will be made. The legislation will be introduced “when parliamentary time permits,” according to Companies House. “It won’t happen overnight. And during that time, criminals will continue to launder money through the UK, ”says Cowdock. For me, changes can’t happen fast enough.