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Shell companies

Member: Nifa

Forensic financial investigations appear to be flavour of the month on television at the moment, as, hard on the heels of Follow the Money, another series, Vera, has been talking about “getting the forensic boys in”. However, where Follow the Money is all about the shenanigans of a shady bank chief, in the latest episode of Vera, the plot revolved around a murder.

In the popular show, Vera is investigating what appears to be the suicide of a young man until a forensic investigation of a different kind reveals that shortly before he fell from a tall building, he was punched in the face. This revelation draws the detectives to the whereabouts of the facilities manager, who appears to be rather too close to the building’s surveyor. As the story unfolds, it becomes clear that the building from which the boy ‘fell’, which is in a state of bad disrepair, was sold to a shell company run by the two men for a knockdown price and they intend to make a killing when they sell it.

Shell companies have long been the subject of forensic investigations, as they are often set up to hide the real owners and motives behind elaborate frauds. Their façade, or shell, looks legitimate but it is only when forensic accountants get behind the shell that they can follow the trail to where the truth lies.

Formerly the preserve of huge conglomerates, shell companies are now the ‘financial and deception vehicle of choice’ for all manner of criminals, from arms dealers to corrupt politicians. However, not all shell companies are criminal, so it is up to “the forensic boys” to uncover whether their purpose is to conceal or to preserve future business rights.

In the UK shell companies are now less effective at concealing the true owners of assets by virtue of the recent requirement for directors to file an annual Confirmation Statement at Companies House identifying those individuals capable of exercising significant control over the company.

Author: Roger Issacs, 10 April 2017

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