Money Laundering Using Trust and Company Service Providers

Trusts and Company Service Providers (TCSPs) can provide an important link between financial institutions and some of their customers.  TCSPs have often been used, wittingly or unwittingly, in the conduct of money laundering activities. The majority of TCSPs are established for legitimate purposes, the Financial Action Task Force’s research Shows that some TCSPs are being used, unwittingly or otherwise, to help facilitate the misuse of trust and corporate vehicles.

The FATF’s Money Laundering Using Trust and Company Service Providers report evaluates the effectiveness of the practical applications of the FATF’s 40+9 Recommendations as they relate to TCSPs.  It also considers the role of TCSPs in the detection, prevention and prosecution of money laundering and terrorist financing.

The report is an update f the 2006 report: The Misuse of Corporate Vehicles, Including Trust and Company Service Providers, 2006. presents issues for consideration that should help to reduce the use of TCSPs for money laundering purposes.

There are no simple answers, other than knowing your business partner. Complex arrangement of entities are usually required to make structures tax-efficient across international borders, to isolate risk, to meet regulatory requirements, and to clarify management. On the other hand, bad guys can use these structures to hide the true ownership and that the true source of capital is dirty money.

The Financial Action Task Force (FATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering and terrorist financing.