Dozens of Phantom Companies Created in the UK Without the Consent of their ‘Owners’

Dozens of Phantom Companies Created in the UK Without the Consent of their ‘Owners’

Diogo Augusto investigates loopholes in Companies House business registrations which make Britain ‘the jurisdiction of choice for dirty money’

A number of companies have been incorporated in Companies House (CH) this year whose owners are oblivious to their existence and whose registered addresses are not authentic. The goal, experts say, may be to set up bank accounts, use the overdraft facility and let the oblivious owners foot the bill.

One of these companies is Blaise Helen Garment Trade Ltd, incorporated on 18 February 2022. This company’s name features its owner’s first and middle names (“Blaise Helen” Hawley), then adds a generic area of trade (in this case ‘garment’) and then adds the words ‘Trade Ltd’. The company was registered with a statement of capital of £100, has only one owner and the declared nature of business is “47910 – Retail sale via mail order houses or via Internet”. 

From 1 January 2021 until 17 February 2022, no company was incorporated with these characteristics. However, since then, in three months, 77 more have been incorporated following the exact same format.

According to Companies House, James Cameron Rumsey started a business on 1 March 2022 called James Cameron Furniture Trade Ltd. We have spoken with James Rumsey and he confirms his full name, address and even date of birth are correct on those records. However, he has never started this company.

He said: “it looks like my name has been used without consent. My address has also been used on Companies House for this without my consent or knowledge”. 

They won’t lend you books from the library without being certain who you are, you need to bring along your council tax bill or a utility bill. You don’t need that to open a company, and that’s just astonishing.

Graham Barrow

Rumsey is one of 53 UK residents whose name comes up as owning one of these companies. The remaining 23 have US addresses, like Jordan Tyler De Geus, a Washington State 31-year-old resident who apparently incorporated, on 28 February 2022, a company called Jordan Tyler Luggage Trade Ltd.

Again, despite the details on CH being correct, for Mr De Geus, our email came “completely out of the blue”. Having spent a holiday in the UK back in 2017, that’s the only connection he has with the country and he too denied having registered this business with CH or even being aware of it.

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This is not uncommon. When a company is registered, the person(s) being named director and/or owner are not necessarily notified. CH assumes the applicants are who they say they are as they indeed, conduct an “authentication” process. 

In order to authenticate a person’s identity, three of the following items need to be provided: town of birth, mother’s maiden name, father’s first name, telephone number, national insurance number or passport number. A CH spokesperson said, however, that they are unable to confirm whether the information provided by the applicants is correct.

In fact, the spokesperson stressed the fact that some companies are not registered directly with CH, but through a third party and “some third party agents, when incorporating on behalf of a client, are required to carry out identity checks under anti-money laundering legislation”. When asked whether it could be assumed that if one was looking to avoid identity checks, they would avoid using third party agents and deal directly with CH, though, they declined to answer.

Because company owners and/or directors don’t receive correspondence when the business is incorporated, this means they would not know about it unless they googled their name or otherwise stumbled upon it. 

Even if one was to find out their name was on one of these records, removing it would be a complicated process that would include getting a court order to be removed as a shareholder of a company.

James Rumsey tried to have his details removed from CH after he was approached by Byline Times. “I have contacted Companies House to have my name removed as director, however, they wouldn’t allow it as I do not have the login details for that particular company,” he told Byline Times.

Companies House does send correspondence to a business’ “registered address” (namely, the login details), however, in these cases, they have no connection to the “owners” The ones with which we spoke said that those addresses didn’t mean anything to them.

There’s a good reason for this. In most cases, these registered addresses have been chosen for specific reasons. They are addresses that have been used by accountants or company formation agents and will often be the same for tens or hundreds of other, real, businesses.

Emily Marie Garment Trade Ltd, for example, was registered to an Edinburgh address. Upon ringing on the buzzer, a woman came and told us her late husband used to be an accountant and would register companies to that address. This, however, hasn’t been done since he passed away two years ago.

Later, her son Alex called and said that he did receive a letter from CH about this company. He contacted Emily Marie Budnichuk (the supposed owner) by letter and she confirmed she didn’t know about the existence of this business. He filed to have his address removed, but Emily Budnichuk still shows as company director and owner.

Graham Barrow, an expert in due diligence and banking, has an idea of why someone would want to set up these many companies using other people’s identities. “For a variety of reasons,” he says, “the first one is if you’re intent on defrauding banks”. 

According to Barrow, as most banks will perform electronic ID checks,  people can then apply to open business banking accounts after setting up these companies. The banks will see that the “owners” of the company exist and “there’s a good chance that you will be able to open business banking accounts for a good number of those companies and many banks give you automatic overdraft arrangements”.

This means the overdraft can be used and the “owners” of this company won’t be aware of any of this until they get the bill.

Graham Barrow said: “they won’t lend you books from the library without being certain who you are, you need to bring along your council tax bill or a utility bill. You don’t need that to open a company, and that’s just astonishing.”

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Business Secretary Kwasi Kwarteng announced reforms in February but, so far, nothing has been put in place to avoid these situations.

A Government spokesperson told Byline Times: “Criminals and fraudsters should not be able to profit from dirty money, which is why we are cracking down on this issue.

“The reforms will give Companies House a strengthened role in tackling economic crime by increasing the transparency of company ownership and management while offering businesses greater protection from fraud.”

However, they chose not to comment on whether specific measures were going to be implemented to “clean” the records of companies that already exist and are not authentic.

Dame Margaret Hodge, Chair of the APPG on Anti-Corruption & Responsible Tax said: “Villains and oligarchs abuse the company registrar in the UK by setting up shell companies for nefarious deeds and posting false information. That’s why the Government must urgently reform Companies House so that it’s no longer just a postbox for lies and secrecy. The recently announced Economic Crime Bill should include provisions to make these changes.”

Dame Hodge thinks these changes must go deeper despite the already announced reforms. “Luckily for Ministers, my recently launched, cross-party Economic Crime Manifesto has a whole host of measures that would fix this mess,” she told Byline Times. “The registrar needs new powers to verify information, remove entries from the register and increase the price of company formation from £12 to £50. Then we could begin to end Britain’s reputation as the jurisdiction of choice for dirty money.”