Investigators zero in on shell companies with Russian officers and people say one firm may be shipping Ukrainian grain illegally
(Bloomberg) — The UK government suspects Russian nationals have exploited lax checks by the companies register in attempts to launder war profits stolen from Ukraine, according to people familiar with the matter.
British law enforcement agencies have identified large numbers of sham companies incorporated in the UK by nationals from a range of countries in recent years, likely for the purposes of money laundering or tax evasion, the people said, asking not to be named discussing confidential matters.
Hundreds of those firms list Russians as their officers and some Russian-controlled companies are now trying to exploit the war in Ukraine for financial gain, the people said.
Russians have been prominent among those drawn to the City of London by light-touch regulation that allows them to shelter their assets with little scrutiny. While the UK has imposed wide-ranging sanctions on many Russian companies and individuals since the invasion of Ukraine, the years of courting foreign money have left the British financial system riddled with shell companies and other opaque structures that complicate efforts to enforce restrictions on Russian interests.
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he British government is in the process of strengthening laws to reform Companies House and clamp down on financial crime. The Economic Crime and Corporate Transparency Bill was introduced to Parliament on Sept. 22 and seeks to give the companies registry more powers to uncover who is forming companies and investigate suspected fraud.
The administration says that it has some of the toughest anti-money laundering controls in the world and the new law will help to clamp down on the thousands of UK-registered companies used to facilitate money laundering, fraud, terrorist financing and illegal arms purchases.
One company identified by the British authorities is registered at an office address in London and listed on shipping registries as the owner of a grain transporter. The vessel is suspected of illegally transporting grain out of Ukraine and violating international sanctions, the people said. The ship has repeatedly traveled through the Black Sea in recent months, public data show.
The company has three current and former officers listed on Companies House, Britain’s register of companies, who are all Russian nationals who listed home addresses in Russia. Neither they nor the company have any discernible operations in London.
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The European Union had discussed sanctioning the firm as part of its latest package of measures, according to documents seen by Bloomberg. The company was removed from the proposal before the package was approved during negotiations between member states.
Several other companies with no obvious British operations were incorporated at the same London address by other Russian nationals, filings show. One of those people is an employee at Russia’s ministry of internal affairs whose home address is listed at Companies House as an apartment in central Moscow.
“We are aware of the misuse of the company register to support illicit activity,” a spokesperson for Companies House said, declining to answer questions about individual companies. “Where potential criminal activity is identified, we work closely with law enforcement agencies to refer matters and support investigations.”
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Oliver Bullough, an author and financial crime expert who has written a series of books on tax evasion and money laundering in Britain, said thousands of criminals had incorporated firms in Britain in recent years. They chose the UK because it is cheap to set up a company, there are relatively few checks on the information they have to provide, and having a British address gives them a veneer of respectability.
They use accounts either with British digital banks, or overseas leaders, to launder money, he added.
“I have no doubt that British companies set up several years ago by foreign nationals are now involved in the looting of Ukraine,” he said, drawing on his general experience of tracking illicit transactions.
A person familiar with UK law enforcement investigations into money laundering said criminals use British companies to move large sums of money into the country and hold it for a few years. Then they either move the money out before they have to file accounts with Companies House, or they file fraudulent accounts that do not reveal the real assets held by the company.
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