Whatever ministers say, questionable companies can hide in plain sight. Just look at the case of Business Bank Italy Limited.
Britain’s overseas territories are to be forced to adopt public registers of company ownership by the end of the decade. That’s a step in the right direction – and one many of us have long been calling for. But do not let the focus far afield distract you from the problem closer to home. It remains far too easy to launder money through companies in the UK.
Over £90bn a year is estimated to be laundered through the UK financial system. The government recently announced reforms to tackle money laundering carried out through anonymous entities. But they will make little difference, because it is too easy to create companies in the UK, and for the most part, regulators do nothing about it.
Don’t believe me? Consider, then, the story of Business Bank Italy Limited. BBIL was registered at Companies House in 2008, giving a central London street as its initial address. Since then, the bank’s registered address has changed several times, and is now in Birmingham. So far the bank has had 26 director appointments and 24 resignations. The shareholders and directors are mostly from Italy, Hungary, San Marino and Spain, and are resident outside the UK. Its website offered venture capital, wealth management and prepaid Mastercard services to the general public.
Several directors have had run-ins with the Italian police. Alessandro Della Chiesa was BBIL’s first director, a position he held until 2009, and was also company secretary between 2010 and 2015. He had been on the radar of Italian police for some time, and was sentenced to six years in jail for fraud and embezzlement in 2009. Another former director, Antonio Righi (aka Tonino the Blond) had alleged links to the mafia. Righi was convicted of trafficking drugs and handling stolen goods in 2004. The carabinieri – an Italian military force charged with police duties – has been investigating Righi’s activities since 2008, and in 2016 Italian police seized the business empire of the Righi brothers. Righi is awaiting trial.
Righi’s name has appeared and disappeared from a number of UK-registered companies. Most notably, he was once a director of Magnolia Fundaction UK Limited, which filed documents at Companies House stating that the name of one of its officers was “the Chicken Thief” with the occupation of “fraudster”, and another was resident at “Street of the 40 Thieves” in the town of “Ali Babba”. Companies House accepted all such returns, and in an answer to a written question, the business secretary, Greg Clark, said no action has been taken against the officers of the company for “filing inappropriate information in Italian”.
BBIL is a dormant company and therefore files rudimentary accounts that barely cover one page. Its accounts say that in 2009 the company had share capital of £10m. The 2014 accounts stated that the company had a cash balance of £10m. The 2016 and 2017 filings reported share capital of £15m but said that it was “called up share capital not paid”. (In other words, there was no cash). No questions have been pursued by any regulator.
This should not be happening. UK-based financial services companies, including banks, are regulated by the Prudential Regulation Authority and the Financial Conduct Authority (FCA). But I’ve searched for “Business Bank Italy Limited” in the financial services register maintained by the FCA and it could not be found – despite the fact that since 2009 certain sensitive words, such as “bank”, can only be used in a company’s name with the express approval of the secretary of state, although companies already registered with sensitive names were allowed to retain them. Surely, in the case of BBIL, there should have been a review of its authorisation to use the word “bank”.
This has not been happening under cover of darkness. BBIL was raised in the House of Commons by Anneliese Dodds, Labour’s Treasury spokeswoman, in March. It was followed up by a written question to the chancellor asking him to explain when BBIL was authorised to conduct business, and a number of related questions. Eventually the FCA chief executive, Andrew Bailey, responded on behalf of the chancellor and said that BBIL is “not authorised by the FCA. It has never applied for authorisation with us. It is not clear if the company is carrying on any regulated activities … that would require FCA authorisation.”
Despite the public revelations, BBIL has so far been allowed to retain the word “bank” in its name. Bailey confirmed that the FCA is aware of the reports about BBIL in the London Evening Standard, but would not say whether his organisation has taken any action, sheltering behind the cloak of “confidentiality” to avoid public accountability. After questions in parliament, the BBIL website has now vanished, though the company is still live.
It is not known how many similar companies are still registered in the UK. The UK has at least 29 anti-money laundering regulators, with thousands of staff, yet none seem to perform checks on companies connected with questionable individuals. Individuals with criminal records can still control companies here because, the Department for Business says, “Companies House does not have powers to verify the authenticity of company directors, secretaries and registered office addresses”.
So this is where we are. Ministers huff and puff about combating financial crime, but in the absence of effective action by regulators with teeth, the UK cannot win the fight against money laundering. Remember that the next time you’re told we have safeguards second to none.