Trust and Company Service Providers

CE

The Trust and Company Service Providers (TCSPs) industry is susceptible to abuse by money launderers due to its ability to create and maintain legal structures for clients that can obscure the beneficial ownership of assets. Below are the two potential indicators of money laundering associated with TCSPs:

A. Multi-jurisdictional wire transfers with no legal purpose: One of the key methods of money laundering is the movement of funds through multiple jurisdictions to make it difficult to trace the source of funds. Multi-jurisdictional wire transfers can be used to move funds between countries and jurisdictions with different regulatory regimes and standards for detecting and preventing money laundering. When these transfers lack a clear legal purpose, such as payments for legitimate goods or services, it can indicate that the funds are being moved for illicit purposes.

B. House of legal persons in jurisdictions with strict secrecy laws: Money launderers often seek to create legal entities, such as companies or trusts, to obscure the beneficial ownership of assets. Jurisdictions with strict secrecy laws can provide an environment in which it is easier to conceal the true ownership of these entities. These legal persons can then be used to receive and distribute illicit funds. Therefore, the establishment of legal entities in jurisdictions with strict secrecy laws can be an indicator of potential money laundering activity.

C, D, and E are also potential indicators of money laundering but are not specifically associated with TCSPs. Structuring cash deposits into third-party accounts can be used to evade reporting requirements and conceal the source of funds. The generation of rental income to legitimize illicit funds can be used to create a veneer of legitimacy for illegal funds. Frequent deposits to or withdrawals from bank accounts can be used to move funds through the banking system to obscure their source or destination.