If Britain’s company registry is to be believed, my family and I have been sharing our dwelling with a Russian in his mid-forties. For a time, our place doubled as an office for his start-up, which he set up last year, and in which he is the sole shareholder.
The trouble is, it’s not true. We have never heard of “the Russian”. But evicting our virtual squatter turned out to be complex — and costly.
Trawling through public records is the backbone of my work as I follow global money flows searching for evidence of financial fraud or accounting acrobatics. So I’m aware that records at the UK corporate registry, Companies House, contain errors and lies.
Dubious filings abound on the registry. Was Christ, Jesus Holy with a residence in Heaven truly a director of Weight A Minute Limited for a year? Why has a dormant company — most recently named M.A.D Group Limited — changed its name nearly 250 times since it was set up six years ago before it was voluntarily struck off?
These are just some of the oddities that Graham Barrow, an anti-money laundering expert and host of the Dark Money podcast, has come across. “It’s really difficult to know what are crimes of commission and crimes of omission,” Barrow says. “Is it deliberate or accidental?”
Britain has long attracted criminals who want to launder money and abuse of the corporate registry is rife. Research by Transparency International has catalogued at least 929 UK shell companies used in corruption and money laundering cases which it estimates could cost the global economy as much as £137bn.
What I discovered about our purported tenant certainly raised questions. Following a trail of public records, I traced an individual with the same name and birth date to the Russian city of Nizhny Novgorod. There, he presided over at least half a dozen companies, most of them dissolved. His British company set up a now defunct website selling artefacts for online games — another red flag. Online gaming has become a popular way to launder money, with players transferring in-game items that can be turned into tangible currency.
Setting up a business in Britain is cheap, costing as little as £12. However, Companies House does not have a remit to check 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 one was an activist who registered a company in the name of former business secretary Vince Cable in an effort to expose loopholes in the registry.
There is little data on how often addresses are fraudulently used or false information filed, but it has become a growing problem. Removing the address of a director is relatively simple. But getting rid of false shareholder information requires hiring a solicitor and obtaining a “suitably worded court order”, according to Companies House. The burden of proof — and legal cost — is on the person whose address they used.
The Russian’s company was due to be struck off from the register earlier this year. However, according to Companies House filings “cause has been shown” why the company should not be removed. This does not appear to have included checking whether the owner’s address was legitimate.
That might soon change. After years of near-impunity for criminals, the government in 2019 consulted on options to increase the transparency of companies and tackle economic crime. A further consultation which closed in February sought views on reforms which would give powers to the registrar to check the information provided to Companies House.
Ben Cowdock, lead investigator at Transparency International, says the proposed changes only go part of the way to tackling the problem. Clamping down on rogue formation agents is out of the scope of current reforms. Another concern is how fast any changes will be made. Legislation will be introduced “when parliamentary time allows”, according to Companies House. “This will not happen overnight. And during this time criminals will continue to launder money through the UK”, says Cowdock. For me, the changes cannot happen fast enough.