Running the corporate vehicle off the road

In November 2006, the Financial Action Task Force (FATF) published two research reports: one looked at new payment methods and how they are being abused by money launderers (reviewed in last month’s MLB) and the other examined the misuse of corporate vehicles, which Sue Grossey distils this month.

Sue Grossey may be contacted on tel: +44 (0)1223 563636; email susan@thinkingaboutcrime.com

In the very first sentence of its report entitled “The Misuse of Corporate Vehicles, Including Trust and Company Service Providers” [1], the FATF comments that “despite the important and legitimate roles corporate entities, including corporations, trusts, foundations and partnerships with limited liability, play in the global economy, they may, under certain conditions, be used for illicit purposes including money laundering, bribery and corruption, improper insider dealings, tax fraud, financing of terrorist activities and other forms of illegal activities.” The possible link between corporate structures and crime was noted by the economist Howard Scott in the middle of the last century, when he defined a criminal as “a person with predatory instincts who has not sufficient capital to form a corporation”. A little cynical, perhaps, but the FATF at least sees the problem of the misuse of corporate vehicles to be sufficiently widespread and pressing to warrant a whole 71-page report.