The (Mis)Use of Corporate Vehicles by Transnational Organised Crime Groups in the Concealment, Conversion and Control of Illicit Finance

Transnational organised crime groups and the difficulties in intervening with illicit finances have been identified as a high-priority concern by the UK government (see Serious and Organised Crime Strategy (SOCS) (2013)) and remain high on the agenda of other sovereign states and intergovernmental bodies such as the EU and UN (see for instance SOCTA (2013)). A central issue for transnational organised crime groups is that in order to conceal their illicit finance, some form of collusion and/or cooperation with external, legitimate actors such as accountants, lawyers and other professionals may be required. One mechanism for facilitating this is the creation and misuse of legitimate business structures, such as 'corporate vehicles' - the EU's Serious and Organised Crime Threat Assessment (2013: 14) foregrounds how 'organised crime groups exploit various legal business structures and professional experts to maintain a façade of legitimacy, obscure criminal activities and profits, and to perpetrate lucrative and complex crimes'. Licit corporate entities provide opportunities to conceal, convert and control illicit finance and the proceeds of criminal behaviours by offering an external appearance of legitimacy to the 'beneficial owners' (i.e. the real people who actually own them) of these entities and/or the clients who use them to transfer funds - in this latter case, third-party legitimate actors become witting, or unwitting (or wilfully blind), facilitators of organised crime activities. However, there remains a major research gap in understanding the dynamics around how organised crime groups misuse such licit corporate entities and who assists them and this project aims to address this.

The project is a new and exciting interdisciplinary collaboration between academics from the University of Manchester, the University of Edinburgh and the Erasmus University Rotterdam with support from non-academic partners Police Scotland and Ciroc/the Netherlands Organised Crime Monitor. We have assembled a research team with expertise and research skills in Criminology and Law to investigate the misuse of 'corporate vehicles' by transnational organised crime groups for the management and control of the proceeds of crime in the UK and the Netherlands, and the EU more widely. This is the first such study in the UK. We aim to develop original empirical and doctrinal research, and utilise secondary data sources, to address the following three research questions:

Work Package 1: How, why and under which conditions do transnational OCGs use corporate vehicles to conceal, convert and control illicit finances cross-jurisdictionally?
- Method: (1) A three-month Rapid Evidence Assessment (REA) of existing academic, practice and policy literature to develop an overview of the depth and quality of the 'state of the art' in understanding of problems and impacts associated with the use of corporate vehicles by organised crime groups in the context of illicit finance. (2) Document/qualitative analysis of UK and Dutch enforcement investigation case files, semi-structured interviews and focus groups with law enforcement actors and other informed experts.

Work Package 2: Are there any patterns, trends and regularities in the forms that corporate vehicles take when used by OCGs and how does this compare across jurisdictions?
- Method: (1) Secondary data analysis of EU-wide international, intergovernmental, and domestic datasets and of previous research data.

Work Package 3: Under which legal, policy and enforcement conditions are corporate vehicles misused by OCGs and are there (a)symmetries across EU jurisdictions that create conducive circumstances for their misuse?
- Method: (1) Doctrinal analysis of the laws and policies governing the existence and transparency of corporate vehicles and associated constructs across the constituent jurisdictions of the UK and the Netherlands as well as the overarching EU framework.

Introduction
The misuse of corporate vehicles by organised crime groups in the concealment, conversion and control of illicit finances presents a number of problems for responsible investigators, law enforcement authorities and regulators. Such problems arise when dealing with the immediate criminal networks and activities but more broadly when ensuring the robustness and integrity of legitimate business structures and services for those involved in transnational commerce. The misuse of corporate vehicles for illicit purposes is a highly complex issue in terms of detection as such illicit structures and transactions have an appearance of legitimate practice which is conducive to concealment.

This research project aims to inform our understanding of such misuse of corporate vehicles in order to support the activities of multiple stakeholder groups. For instance, the project will provide these groups with (1) a comprehensive understanding of how, why and under which conditions transnational organised crime groups use corporate vehicles for the concealment, conversion and control of illicit finance in the UK and the Netherlands and associated patterns, trends, features and impacts of these activities and their harms, and (2) a concise analysis of legal, enforcement and policy conditions that govern the creation and use of corporate vehicles for illicit finance in addition to the extent of legal/criminogenic asymmetries across the EU.

Who will benefit from this research and how will they benefit?
The research proposed here builds on concerns raised by practitioners (e.g. those participating in Campbell/Lord's AHRC project) and by the (inter)national community (e.g. inter- and non-governmental organisations, governments) and has the potential to impact positively on a wide array of scientific, practitioner, policymaking and institutional actors:
(1) International intergovernmental and nongovernmental organisations:
- Organisations such as the EU, FATF and Global Witness respectively that lead the international agenda and discourse on the misuse of corporate vehicles will benefit from a comprehensive comparative understanding of the nature and activities central to these illicit enterprises with a view to impacting on their international policies towards what is required of legal frameworks and their evaluation of enforcement responses in contrasting jurisdictions.
(2) Law enforcement authorities:
- Including investigators (e.g. Police Scotland and Ciroc/the Netherlands Organised Crime Monitor) whose approach to intelligence and evidence gathering as well as intervention and disruption practices will be directly informed data on how these behaviours are organised and the conditions that are conducive/restrictive to their occurrence.
(3) Central/local government and policymakers:
- Transnational organised crime is a high-priority concern for UK and Dutch governments, locally and nationally, and they must develop strategic and operational policies and priorities for implementing legal frameworks and protecting UK/Dutch systems, services and (corporate) infrastructures.
(4) Private sector institutions:
- Financial institutions, such as banks, are often involved, whether knowingly or not (or being wilfully blind), in the facilitation of illicit finances. Such businesses must implement robust financial monitoring mechanisms.
(5) Academic researchers:
- Those working in an array of disciplines can benefit from the unique insights of a criminological/socio-legal analysis that will inform concepts, theories and models existing in their own discipline areas. (See Academic Beneficiaries section).