Money laundering in the UK

A couple of years ago I bought a newly built apartment in a small European country. I am a European citizen, but at the time I didn't have any kind of residence or residence permit in this country. To buy and officially register the property in my name, all I needed was a copy of my passport and then to transfer the money. I didn't need to provide any shred of evidence of where the money came from.

I'm happy it was so easy, but in a way I'm also quite surprised I wasn't ask for anything more. This country has a lot of Russian expats, so called "new money". After two years you can sell a newly built property and only pay capital gains tax (if you sell before you need to pay VAT), so it does make me wonder how many people use this as a way to launder money.

BuzzFeed had a series of articles about a number of suspicious deaths of Russian expats who had fallen out with Putin or otherwise were persona non grata. Apparently the Home Office / upper echelons of the police were dragging their heels in investigating them - the general conspiracy theory is no one in the UK government really wants the flow of money from Russian oligarchs that is propping up the London property market to dry up. Tie that with May's speech sometime ago (little reported on) that the UK needs to be "better friends" with Russia (and this was _after_ Salisbury)...

With this and Brexit and everything else, I really want out of this country. But then I'd have to move back to the US.

As for the FBAR, it is annoying, but at least only tedious and not onerous. I will never have enough money to really justify having to fill out these forms - and the people who really ought to are the ones with enough to hire the specialists to hide it from the US government.

If you buy property in the uk the money will have to be handled by a solicitor who does checks for money laundering.

In the US any property can be owned by an anonymous business which you own through deeds.

Dont forget “art”!

Getting business bank account is not that difficult. There are lots of new challenger banks that give business accounts easily, you just need virtual office and proof of UK residence (council tax for example). I have opened business bank account at the beginning of this year just after returning to UK from abroad, renting a place and getting council tax bill in couple weeks, getting some cheap virtual office for the company and then opening bank account is super easy.

All you need is proof of address (a utility bill). The article hints at it, but identity theft is rather easy in the UK.

A few years ago someone went to a Vodafone store, opened a contract and walked out with a new iPhone in my name. I'm not exactly sure what they used to do that, but shortly after I found bank accounts and other phone contracts in my name, so I assume they used the Vodafone contract as proof of address.

So would this mean you need a partner such as HSBC to overcome the KYC?

Curious how this sort of high level crime can continue in the UK even after all these articles and investigations...

It's funny you should say that, when I moved to the UK for a couple of years I had a couple of months at the start were I was casually job hunting and no banks there would give me a personal bank account unless I had a full time job... I think I had about £10k I wanted to transfer over at the time too.

I knew I wanted to go contracting so I setup a ltd company and had a business bank account within a couple of days.

I used to be involved in a UK based startup (as a developer) where we would create a bank account for our customers as a part of the product.

The AML/KYC process was outsourced. The customer would go through the registration form, provide their details, and then we would hit up the third party AML/KYC API, which would come back with details on the additional information required.

We would then have to chase up the customer for this information (usually a picture of their passport/utility bill, that sort of thing) and provide this back to the third party handling AML/KYC, who would then give authorization to another third party to create the actual bank account.

The whole thing seemed ripe for abuse. After a bank account was created, at no point was the customer contacted by the third party to tell them a bank account had been created in their name. If I was malicious and knew somebodies address history, DOB and had a picture of their passport, I could create a bank account for them with a couple of API calls, and they wouldn't have a clue.

It used to be that to get a bank account you would have to physically go to the bank and meet a human being first, but we’ve moved away from that.

We were closely watched by, and regularly in touch with, the FCA who didn't have any problem with what we were doing.

I'm guessing that the bank account itself is outside the UK, just the corporate structure running through the UK.

For example one of the companies mentioned: https://beta.companieshouse.gov.uk/company/OC364391/filing-h... : the two "members" of the limited liability partnership are Marteza Alliance Ltd and Dorado Group Ltd, both Seychelles registered companies.

In the unlikely event of the government wanting to fix this, I frankly think they should (a) ban the use of LLP by anyone other than natural persons and (b) blacklist all the tax evasion jurisdictions entirely. They will never do the latter but might be persuaded to move on the former.

> getting a bank account. I can’t speak to the process in the U.K. but in the United States the “know your customer” rules are quite strict and accounts for businesses are doubly so. Just having a set of incorporation papers won’t work and it can’t be done online (in my experience).

This would really hurt the online-only banks if it were true. I opened a (personal) Capital One account online.

https://en.wikipedia.org/wiki/Direct_bank

I got a US bank account by visiting the bank. No questions asked. So did my friend (different bank and state). I think you are over-estimating the KYC or visiting the more reasonable branches.

Lots of branches in NY will be more than happy to open a bank account for you and give you a credit card if you have 1500-2000 US dollars.

You can buy a company with a bank account for a few thousand.

Exactly. Obtaining a bank account requires person's ID and tax number. Even if you would know the private tax number, the person in question would get a high income tax and would start to investigate.

My understanding is, the purpose of these companies with fictional founders is for founding/owning other companies registered elsewhere. The article does mention that the chain of ownership crosses many borders and can become practically impenetrable or very expensive and time consuming to investigate.

So let's say, somewhere in the chain of onwership there are some real unsuspecting people, possibly accounting agencies, managing real banking accounts. By the time you find them the money will be gone, the agencies will disappear, the occupants of the registered postal addresses will be different. You are going to need a lot of official inquiries in multiple countries to trace everything back to the source. It might prove to be almost impossible to do.

Or by the time you finish your investigation Putin himself will be gone.

I suppose things have changed a bit since I moved to the UK, but in my experience, the US is infinitely better than than the UK is terms of banking. It was quite easy to open up a business bank account in the US - took one day. Here, it is still hell to open up an initial personal bank account - passport, the residence permits, the proof of address... A few weeks at least. Once you are in the system, it does get a bit easier, but the UK system is still tied to the concept of you're associated with a specific branch at a specific location - it is like the 1950s in some ways. Larger banks are sort of more efficient, but it is not the US at all.

I don't agree with your first point, but it sounds like the basis for a coherent argument.

However I think your second point is arguing against a statement the article doesn't make at all. The article is really arguing about making it possible to prove guilt, not just seizing everyone's assets and then checking if they're dirty!

That's the whole point of money laundering - to make the money look legit, so that you can use it. Shell companies are not only to put the dirty money in the system but also to produce a fake record of successful business transactions that make the money look legit.

Depending on the amount of money you have there, one can set up trades so that the other party gets your money by you "losing" it. One can buy gems, property, rare collectables. You can afford losing 10-50% of the money, but in return still getting enough which will be cleaned. It's not easy, but it's not rocket science either.

The usual trick is to then have your corporation (pile of illegal cash) loan "you" money - that was Manafort's way, for example. No tax owed on a loan, it's not income.

It's not on his account, he would have the credentials to make transactions with the account.