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Asset Search Blog Investigating & Recovering Hidden Money & Other Assets

Unmasking Beneficial Owners To Identify Their Assets

Posted in Asset Search/Fraud Investigation, Financial Institutions, Money Laundering, Swiss Banks, Tax Fraud

Laundered Assets analyzes the way a beneficial owner secreted undeclared revenue in a “back-to-back” loan, (i.e. a fully collateralized loan in which the borrower and lender are one and the same).  “True Beneficial Owner” facilitated this money laundering scheme by putting a Liberian shell company to work as a nominee / intermediary.  A chart at Laundered Assets shows that True Beneficial Owner deposited $27 million in undeclared revenue into a Curacao bank account maintained by the Liberian company:

Since True Beneficial Owner applied the Curacao bank account and the Liberian company as nominees, tax authorities or anyone else would have difficulty searching for True Beneficial Owner’s assets.  One countermeasure to this problem of bank accounts maintained in the name of nominees, is bank customer identification rules.

As the legal memo at “Customer Identification At UBS AG And Some Other Banks” explains, bank customers in Switzerland execute a “declaration of beneficial ownership” to identify themselves when opening financial accounts.  The Fifth Recommendation from the Financial Action Task Force and an April 29, 2011 Organisation for Economic Co-operation and Development discussion paper, similarly emphasize the need to identify true beneficial owners.

The U.S. Financial Intelligence Unit known as FinCEN, also recently proposed a rule change which would create a categorical requirement for U.S. financial institutions to identify the beneficial owners of financial accounts.  The March 5th notice available here, says that FinCEN seeks the rule change because “[i]llicit actors continue to create legal entities, masking beneficial ownership information in order to facilitate access to the financial system and conduct financial crimes”.

(Edited April 8, 2012)

Copyright 2012 Fred L. Abrams