Visi Money
The United Kingdom has been identified as the global leader in risks associated with shell companies, according to new research from Moody’s Analytics. The study analysed data for more than 485 million companies, entities, and individuals and discovered that the UK had almost five million risk flags, surpassing China’s 3.4 million and the United States’ 1.8 million.
Shell companies, while not inherently illicit, have been frequently used for financial crimes including fraud, money laundering, and tax evasion. The newly introduced Shell Company Indicator by Moody’s flags seven behaviours commonly associated with shell companies, such as atypical directorships, mass registration, and financial anomalies.
The ease of forming a company in the UK, requiring only one real person above the age of 16 to be appointed, has been cited as a contributing factor to the country’s high number of risk flags. The report also highlights the UK’s leading position in other categories such as ‘atypical directorships’, ‘mass registration’, and ‘jurisdictional risk’.
The study has raised concerns about the volume of flagged entities in the UK and the challenge for organisations to conduct due diligence. Moody’s Analytics has called for proactive measures and enhanced detection capabilities to identify the legitimacy of shell companies.
