Anti-corruption organisation, Transparency International, has warned governments across the world against relying on the assistance rendered by corporate service providers.
This follows a new investigation based on leaked documents showing the alleged role of a United Kingdom-based company formation agent in setting up and managing firms linked to fraud and criminal activity in multiple countries.
TI said that countries that rely on such firms for identifying company owners and vetting their sources of funds are at greater risk of money laundering and corruption.
The organisation noted that developing countries are at higher risk of falling prey to these organisations.
Research and Policy Expert at Transparency International, Maira Martini, said, “Company formation agents have been at the heart of scandals like the Panama Papers and Paradise Papers.
“This investigation appears to give us another example of how some corporate service providers have allegedly facilitated money laundering and criminal activity.
“Formation agents need to face tough consequences when they fail to conduct proper due diligence on their clients.
“Yet some countries have actually chosen to rely almost entirely on such agents to identify the real people behind companies and vet their funds. This is like the fox guarding the hen house.”
Corporate Service Providers are organisations that provide support services to business.
They find solutions to the customer problems and render services including financial, business advisory, tax and investment services.
