Shells, Trusts and similar entities In International Money Laundering

Download 474 b.
Hajmi474 b.

Shells, Trusts and similar entities

  • In International Money Laundering

To Be Covered Today:

  • Why utilize off-shore entities?

  • How easy are they to establish?

  • What are the typical offshore entities utilized in money laundering?

  • How are they structured?

  • How do you get to the beneficial owner?

  • Some case examples.

Why utilize Off-Shore Entities?

  • Perception of Bank Secrecy.

  • Criminal Organizations recognize the difficulties law enforcement encounters when international borders are crossed.

  • Opens the door to the utilization of a wide variety of financial products and/or services.

    • Banking and Brokerage services
    • Tax shelters
    • International Investments

Why utilize Off-Shore Entities?

  • Range of service providers and types of non-financial services offered.

    • Mail drops
    • Answering services
    • Legal representation
    • Multi-jurisdictional citizenship
  • Ease of establishing complex web.

How do they service the Criminal?

  • Hide the source of funds used to buy property.

  • Conceal the true ownership of real property.

  • Maintain control over criminal proceeds and assets.

  • Break link between illegal activity and assets.

  • Provide some security from detection.

      • Fluctuation of balances or international wire traffic attract less attention in corporate accounts than in personal ones.
  • Perpetuate or support a fraud.

How easy is it to go offshore?

  • In Short – VERY!

  • Utilization of law firms – both domestic and international

  • Utilization of various nominee incorporation services

  • The Internet

What are the typical off-shore entities used for money laundering?

Shell Companies

  • Have no physical presence, employees or product.

  • Operate from a mail drop, mail center, office service business or the Internet.

  • Set up through intermediaries or attorneys.

  • Laws vary as to what information the establishing service must provide to the incorporating jurisdiction.

  • May be owned by other corporations, nominee owners.

Shell Companies

  • No capitol and minimal fees are required to establish.

  • Are often owned by nominee shareholders, nominee directors, bearer shares or other corporate entities.

  • Can be registered in remote geographical locations.

  • Once established, shell companies can hold bank accounts, own property and maintain assets without reporting such to the licensing jurisdiction.

  • Beneficial ownership need not be disclosed or part of the public record.

Types of Shell Companies

  • Shelf Companies

  • Holding Companies

  • LLC

  • Representative Agencies

  • IBC

Basic Shell Company Structure

Shelf Companies

  • Similar to a Shell company in that they offer no real “brick and mortar” company.

  • Difference between the two is age since incorporation.

  • Shelf companies are:

    • Established to provide a cadre of available entities to be sold at a later date.
    • A defunct corporation that was purchased for its history and later sold to a client.
    • A company that is passed along between clients but is kept alive and available for re-sale.
  • Shelf company value is based upon its age, history and banking relationships.


  • A trust is a binding obligation, requiring a person (the trustee) to manage the property or assets over which he/she has control (the trust property) for the benefit of persons or entities specified (the beneficiaries) as described under the terms of the trust (trust deed and letter of wishes).

  • The trust arrangement can be set up for a determinate or indeterminate period of time.

  • The trust owns the assets assigned to it.

  • Trusts separate legal ownership of property from beneficial ownership.


  • Trusts are granted a greater level of privacy than corporate entities and are not required to be centrally registered.

  • Most services establishing trusts or other trustee services are not regulated.

  • Many utilize attorney escrow or operating accounts as an entry point for funds transferred to the trust.


  • Trusts have many legitimate uses:

    • Estate Planning
    • Tax Planning
    • Asset Protection
    • Confidentiality

Trusts and the Criminal

  • Legitimate use of trusts can easily be adapted to the criminal.

  • Although giving up the legal ownership of the property, the criminal maintains distant control over his assets.

  • The distant control allows him/her to shelter his/her assets from his/her criminal conduct or his/her personal connection to it.

  • Layering trusts with shell companies creates a complicated and confusing trail between the criminal activity and its proceeds.

Types of Trusts

  • Charitable Trusts

  • Blind Trusts

  • Discretionary Trusts

  • Life Interest Trusts

  • Dummy Settlor Trusts

  • Insurance Trusts

  • Settlor Directed Trusts

  • Limited Term Trusts

Unraveling Beneficial Ownership:

  • The most desirable and dangerous act for a criminal is to use his/her ill gotten gains.

  • One piece of information can begin the process of piercing the veil of secrecy.

  • There are various investigative techniques that should be used to begin this process.

  • However, there is no one formula except to be as creative as the criminal!

Unraveling Beneficial Ownership:

  • Know how to obtain, follow and analyze information received from various jurisdictions.

    • Make use of MLATS, Letters Rogatory, Mutual Assistance Agreements, etc.
    • Know what you can share – investigator to investigator – on an informal basis to begin the process.
  • Understand what is available in different jurisdictions and how to obtain the information.

Unraveling Beneficial Ownership:

  • Utilize a complete cadre of law enforcement and investigative tools at your disposal.

    • Informants
    • Subpoenas
    • Interviews
    • International Treaties
    • Border searches
    • Search warrants
  • Cooperative efforts between jurisdictions are essential to a successful conclusion.

  • Explore both criminal and civil proceedings.

Unraveling Beneficial Ownership:

  • Focus on and obtain all possible information from the nominee incorporation service or trust provider.

  • This is to include, for Corporations:

  • For Trusts:

    • Be sure to request the Trust Deed, Letter of Wishes and Trustee minutes.
    • Fully identify the settlor and the trustee.
    • Obtain any correspondence, powers of attorney, emails or instructions.

Unraveling Beneficial Ownership:

  • Obtain a complete set of financial records from the Banks involved:

    • Request all memos, correspondence or emails associated with the account.
    • Carefully review and analyze the checks, wire transfers, debit/credit memos and account activity.
    • Understand all of the options for obtaining hard to get banking records.
    • Understand where the funds are actually held for the various types of accounts.
    • Examine checks for differences in handwriting, endorsements or notes.

Unraveling Beneficial Ownership:

  • For property purchases:

    • Obtain a complete set of closing/settlement records, including all notes, file memos and emails.
    • Obtain all back up documents for payments made toward any mortgage.
    • Determine, through the mail system, who is receiving and sending mail at the property.
    • Obtain any available escrow records for source of funds.
    • For high value items, determine where the item was delivered and who signed for the delivery.
    • For high value items, obtain any sales records, including any informal correspondence or notes that may be in the file.

Case Study 1:

  • South Florida Attorney establishes over 40 Charitable Trusts in the BVI.

  • Comes to the attention of law enforcement due to some structured deposits of cash into his bank accounts.

  • Initial analysis of business and bank records identified trusts, but little else.

  • Further investigation unveiled a victim of a financial fraud who had sent money to one of the trusts.

Case Study 1:

  • Surveillance of subject revealed that he was receiving bags of cash from New York, in addition to victim’s wire transfers.

  • Investigation lead to the initiation of wire tap, search warrants and seizure warrants.

  • All of the Charitable Trusts established by attorney were utilized to open bank/brokerage accounts, buy property and launder the proceeds of both fraud and narcotics trafficking.

Case Study 2:

  • Information received indicated suspicious activity into a corporate brokerage account in New York.

  • Account opened through a representative agency in Las Vegas, NV.

  • $18 million funneled through account in 16 months.

  • Other Accounts at firm linked to main account.

  • Funds sent to shell bank in Denmark, shell companies in Bahamas and Trusts in Lichtenstein.

Case Study 2:

  • Seizing the prize:

    • Main defendant purchases, amongst other items, a Mercedes SL 600 Sport Sedan.
    • Car purchased through representative agent in Las Vegas from dealership in California.
    • Car titled and registered to Trust Company with mailing address of a PO Box in Oregon.
    • Initially, thought it was a dead end, but…
      • Car delivered to a parking lot in Las Vegas.
      • Receipt signed by defendant (almost illegible).
      • Pictures of car delivery found in search of residence.
      • Vehicle seized and forfeited.

The car…

Case Study 3:

  • Investigation initiated by report of suspicious brokerage account activity.

  • Construction company and consulting firm in South Florida identified as being involved in building airports for various countries, including Trinidad & Tobago.

  • Determined that a criminal bid rigging and over-valuation of goods scheme was committed in connection to the building of Piarco International Airport.

  • Cooperative effort between jurisdictions helped to unravel a multifaceted criminal enterprise.

    • Bid rigging
    • Contract Fraud
    • Kickbacks
    • Bank Fraud
    • Money Laundering

Case Study 3:

  • Organization established a complex network of shell companies, holding companies and trusts in the US, Bahamas, Lichtenstein, Panama and elsewhere to secrete and move their stolen funds.

  • Bank accounts and assets were held in a wide array of corporate entities.

  • How did it unravel?

    • International Cooperation and sharing of records
    • Border search
    • Search Warrants
    • Cooperating members of the criminal organization

Case Study 3:

  • Obtaining all bank records, including memos and correspondence, was critical to unraveling the web.

  • Banking officers were an integral part of setting up off-shore shell companies, where mail and contact information came back to the bank.

  • Only way to get behind this was the handwritten notes and memoranda in the bank account files.

Case Study 3:

  • Property, purchased by conspirators, was held solely in the names of off-shore shell companies and paid for through trusts.

  • Unraveling true property ownership occurred by examining who resided in the houses and who utilized or benefited from the other assets.

    • Boats
    • Art Work
    • High Value Items

Do'stlaringiz bilan baham:

Ma'lumotlar bazasi mualliflik huquqi bilan himoyalangan © 2017
ma'muriyatiga murojaat qiling