61 000 shell companies registered at one SA address

Credit rating agency Moody’s has found that 61 000 South African shell companies have the same registration address: at a shopping centre in Pretoria. The Citizen reports that the credit ratings agency established this by using its Shell Company Indicator, a subscription-based application that analyses data of more than 472m companies and millions of individuals. The analysis raises flags to identify shell companies that are potentially misused for illegal purposes. Moody’s says they can create a mask for sanctioned individuals to disguise their business ownership and hide financial crimes, such as tax evasion, fraud and bribery. In 2016, the ‘Panama Papers’ exposed crimes by some shell companies after 11.5m confidential documents about a global network of 214 000 offshore companies were leaked.

The Shell Company Indicator analyses data of registered corporations and individuals to flag seven key behaviours commonly associated with shell companies to tackle the rising complexity of fraud, sanctions and criminal money laundering networks. The Citizen notes that seven flags are used to build a portrait of any underlying risks. The Moody’s app identifies hidden dangers such as circular ownership and mass registrations to empower financial services firms to reduce risk when evaluating new customers, while it also helps government agencies to investigate individuals’ and organisations’ alleged financial crimes. Among the roughly 472m companies in Moody’s Shell Company Indicator, about 19m raise one flag and more than 900 000 companies raise two or more flags among the seven behaviours identified. The UK has the most shell companies at 5m, followed by China at 3.4m and the US with 1.8m.

Full report in The Citizen