New tool reveals ultimate owners of companies | Hacker News Reader

New tool reveals ultimate owners of companies

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187 pointsswayvil43 comments

It's my understanding that this will hit a wall in Canada, where lawyers can own companies and sit on boards on behalf of clients, and not be compelled to reveal them.

https://www.cbc.ca/news/politics/supreme-court-removes-fintr...

Is there something similar to this in the US?

Yes, a shell or blind corporation. Lawyer can be listed as agent and officer.

https://www.investopedia.com/articles/personal-finance/07061...

I'm familiar with the business press in both Canada an the US, and I think Nominee Trusts work the same in general, plus there's two US states that are hard-core tax havens where this is certainly the case.

Info about "Nominee Trusts":

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

I had never heard of that, and the story you linked does not appear to make or to support the claim that lawyers can "own companies and sit on boards on behalf of clients".

It does suggest that lawyers are not required to keep records of their clients' financial activities, and that they should be exempt from searches for records pertaining to their clients, for fear of the searches violating privilege. It doesn't seem to be a very clear article though on what the previous situation was, or what exactly the court's decision in 2015 impacts.

I googled briefly "lawyer sit on board for me Canada" and "lawyer own business on my behalf Canada", etc., and did not find anything specific about the topic in the first few results, aside from articles stating that most law firms have internal guidelines for their staff to not sit on boards of anything but non profit organizations, or to only take positions on boards with extreme care, but that is all referring to participation in their own capacity/their firm's, not to acting on behalf of a client in a surrogate role in that client's businesses.

...do you happen to know of any sources that make it clear that lawyers do actually do this?

With power of attorney, Canadian lawyers can create businesses, buy properties, and so forth on behalf of their clients[0]. Thanks to this recent ruling, their clients and their holdings do not have to be revealed. I belive that the previous situation was that lawyers had to report who their clients were and what their financial activities were via FINTRAC, as one of the reporting entities[1].

However, British Columbia has found a way around it, for housing, by requiring that the principal _resident_ of properties exist, be unique, and be declared or otherwise the property will be taxed.[2]

Much of this shady stuff isn't common knowledge and so isn't easily searched. A good start is "the Vancouver model", but that will also include BC's casino-based money laundering.

0: https://www.canada.ca/en/employment-social-development/corpo...

1: https://www.fintrac-canafe.gc.ca/re-ed/intro-eng

2: https://www2.gov.bc.ca/gov/content/taxes/speculation-vacancy...

hacker : code = lawyer : the law

It would be really nice to create an impenetrable set of shell organizations as an open art/citizenship project. No one who has these complex organizations for a purpose would reveal their structure; but, if a set of holding companies were created for no purpose, it could reveal a lot about methods and approaches that could inform public policy.

Will attorneys also bear the criminal reponsibility of the actions of the company?

That's also true for Nevada. In Nevada, you have to name the ownership of a company when formed, but changes in ownership need not be reported. So creating shells and reselling them is a thing.[1] It's possible to break through that protection with a lawsuit, but it makes it more difficult.

[1] https://incorporate123.co/services/gold-package

Came here to say the same!

I see your link proposes and condones illegal behavior! Similar to Montana vehicle registration sites. Sure, completely legal in Montana. Not in your home state though. It's one thing to know about it and take the risk, it's another for the service provider to actively push it on you. I do wonder what percent of California real estate (tax) fraud is going on with Nevada LLCs.

> it is recommended that you maintain "Nominee Services" so that you do not subject your company to taxation or registration in the State where the "Management" is resident. Most states consider a company to be "operating" in the State from which it is "Managed".

This is impressive, but I was really hoping for a browser plugin which could do this automatically for me. Identify entity names, and replace the element with an annotation of controlling interests and associations.

I bet they used the Orbis database from Bureau Van Dijk. That's where the real innovation is. Gather company information from all over the world and republish for good money.

Great business. Bought recently by Moody's.

> Companies House makes the PSC register publicly available. We use its August 2, 2021 snapshot and merge it with the basic company data for live companies (also coming from Companies House) to consider only active (non-dormant) companies in our analysis.

From the paper, they just use companies house.

BvD moodys etc just provide easier access and some data cleansing AFAIK?

They provide data from all over the world.

I don't understand anything in company ownership but can Company A own Company B which in turn owns Company A?

Or to make it several degrees of separation, A owns B which owns C which owns D which owns A?

Yes, it can happen. Above certain thresholds of ownership you need to declare that, and financials get adjusted to reflect consolidated figures, and it ends up working out.

It could be done, and I wonder if someone in the UK (since they are loose) did it.

First, you need to start with an actual person. Say "csomar" register and owns Company A. Then Company A registers and owns Company B. Now Company B goes on to buy Company A. This will require some accounting fraud since Company A value is always superior to Company B.

Selling a company for less than it's worth isn't automatically accounting fraud, is it?

Good point. Now our scheme is totally legit.

> With responsible investing gaining popularity, even as major nations seek ways to counter tax evasion in offshore financial centers and put unwanted individuals and companies on designated persons lists to deter business with them, the problem of revealing the ultimate beneficiary that owns a company through a long chain of intermediaries is as complex and relevant as ever.

Fun.

A good companion to http://theyrule.net/

Unfortunately off the air until they do the re-write.

Also to: https://github.com/public-accountability/oligrapher

Link to the tool's code: https://github.com/eusporg/alphaicon

> The tool ingests ownership data from state registers

That means the most difficult part was solved already. Some countries, especially the more exotic island ones probably, do not have an online public register. They require a local lawyer to walk to the Chamber of Commerce to access ownership info for a company.

Being a tax haven is not always about taxes only.

How does this tool deal with the issue of nominee companies owning shares on behalf of a beneficial owner?

I wonder if this algorithm can be used to solve other incomplete graph problems.

In UK ownership can be derived though Companies House fillings. I have seen tools that do this and provide some sort of network map so you can drill into directors and see their connections to other companies.

> In UK ownership can be derived though Companies House fillings

In theory yes.

In practice, perhaps more grey.

UK Company Ownership:

   (a) Does not have to be a human, a company can be owned by a corporate body (there is a requirement for one human on the board, but that can be a lawyer or whatever, so the actual owners can be behind a corporate body).
   (b) Companies House does not carry out any data validation, they accept what you sign and send them and publish it verbatim.
   (c) There is no jurisdictional requirement on human or corporate body directors (i.e. UK company can be operated by entities based in a, shall we say, more "privacy focused" jurisdiction).

> (b) Companies House does not carry out any data validation, they accept what you sign and send them and publish it verbatim.

I think this is the crux of the issue. While Companies House "appears" transparent, it's actually just a directory website where any dog can put anything.

In the EU, 25% ultimate beneficial ownership must be declared to Companies House equivalent, though not sure if this has to be published..

Global witness does some work to link together the actual beneficial owners, as CH not quite there in determining the structure

https://github.com/Global-Witness

Will it also reveal the ultimate owner of properties? :)

Here in Belgium, companies have to declare beneficiaries to the state and keep that information up-to-date.

I think it's becoming a worldwide thing now and tax-heavens will soon have to catch up to that.

There are rules nearly worldwide about the "UBO" (Ultimate Business Ownership). Then tere are technicalities depending on whether you own 50%+ or 51%+, or 25%, or 24% or less to determine if you're the UBO.

I have no problem with the state of a shareholder being aware that he has share this or there. But only as long as it's just the state for taxation purposes and nobody else (it shouldn't be the business of journalists and kidnappers to know who's wealthy or not).

I also have no problem with people creating offshore companies where they're treated best, as long as it's done legally.

25% UBO declaration was part of the EU Anti-money Laundering Directive 5.

Why is this even considered an innovation? Any graph database can deal with a graph of only a couple million nodes.

it's an incomplete graph problem, no all the edges (and vertices) are available, i guess the best way to describe it is finding missing edges by identifying network "hubs" i.e. most influential nodes (as in PageRank or Katz Centrality https://en.wikipedia.org/wiki/Katz_centrality ). The original paper: https://arxiv.org/abs/2109.07181v2

It's not a database problem but more of a graph search algorithm optimized for particular network topology.

This will enable incompetent journalists to make even more outlandish claims about conflict of interest by politicians.

Like AP claiming the Florida governor had a conflict of interest by taking money from a hedge fund that had a <0.001% investment in a pharmaceutical company that he later advocated for through policy/speeches. By this logic, taking cash from a hedge fund gives you a conflict of interest in practically every industry and company in existence. [1]

Or Politifact claiming the former president had a conflict of interest in a pharmaceutical company by owning an index fund that happened to own it (the amount of second or third hand ownership was less than $1,500). [2]

[1] https://apnews.com/article/joe-biden-business-health-coronav...

[2] https://www.politifact.com/factchecks/2020/apr/09/facebook-p...

In my opinion politicians should not receive money from Hedge Funds at all.

Has that politifact article changed? Because reading just the "If your time is short" blurb states exactly that.

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