Keeping Bad Company
By Rebecca Lindley
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Why Open Source Intelligence is the key to investigating financial crime through Companies House
Recent estimates suggest that as much as 20% of the data on UK Companies House is false. There’s no disputing that this is a major problem: for individuals whose names are used falsely, for organisations defrauded by companies with untraceable directors, and for the UK as a whole, which is rapidly developing a reputation as a hub for financial criminals.
Solving this problem will ultimately require a sea change in the way that UK corporate registration works. However, more immediate tools are available to organisations grappling with the consequences of Companies House’s policy. In this article, we’ll explore how Open Source Intelligence (or OSINT – intelligence generated through the analysis of publicly available or licensable data generally found online) can be used to identify and prevent harm by fraudulent UK companies and/ or criminal officers.
Identifying fraudulent data
One of the most far-reaching challenges of Companies House registrations is that the data input is not verified thoroughly. This means that individuals can input company details that are fraudulent – either invented or belonging to an entirely unconnected person. In this context, investigators can use OSINT to identify where addresses or names are being used elsewhere. For example, an internet search of an address may reveal that it is used by multiple, apparently unconnected companies – which could warrant further investigation. Viewing the same location on Google Maps may also reveal that the location is clearly not premises from which a business operates.
Revealing fake PSCs
The use of fake Persons of Significant Control (PSCs) is common on Companies House, particularly amongst companies where the true PSC wishes to conceal their identity. Since the identity of officers is not checked, searching the internet for officer names will first of all help the investigator to establish whether the officer is a real person. A total absence of web presence may be an indicator that the officer’s name is fabricated, or that they are a private individual who may have no idea that they are listed on Companies House.
Understanding an officer’s history
If they appear to be real, understanding the officers or PSC of a company can help an investigator to assess whether it is fraudulent by revealing possible red flags. For example, examining the officer’s corporate network may show that they have incorporated many companies with similar names (such as strings of numbers) – a common indicator that a company is a vehicle for money laundering or fraud. Similarly, an officer with a history of incorporating then dissolving companies with no evidence of activity or statements filed might also raise suspicions.
Once these types of patterns have been identified, an investigator can use OSINT to understand the true nature of an officer, their company and any previous directorships. If the company or officer has an online presence, the investigator can search for associated risk: are there articles in local media that suggest the officer has been involved in fraud? Are forum discussions indicating that consumers have already been scammed by the company, or by an officer’s previous companies?
Establishing pattern of life
Examining a suspect company’s financial statements can often reveal discrepancies that warrant investigation. Here, publicly available social media can support an investigator to understand whether a company is falsely representing its finances. For example, where a company is reporting only small profits, officers posting publicly about lavish lifestyles on Facebook or Instagram can tell a different story.
Finally, the data collected during OSINT investigations can help investigators to find and understand entire networks of criminals. Multiple uses of the same address or name can reveal a number of connected companies or officers, which may all be part of a series of businesses through which money is laundered or fraud conducted.
When it comes to identifying these networks, the ability to visualise and cross-reference data is key, but doing so manually requires investigators to dedicate amounts of time and effort that are rarely realistic. In these cases, the use of the right technology can allow investigators to achieve the desired results quickly, with a high level of accuracy.
Using tools such as Blackdot’s Videris platform – an integrated solution which allows investigators to collect, analyse and visualise open source data in one interface – can support investigators to produce higher-quality, faster investigations. You can see an example of exactly how Videris can help here. Whilst Companies House’s regulations remain unchanged, organisations and investigators will need every tool available to them to reduce the impact of financial criminals taking advantage of this system.