4 Modes of Money Laundering Vehicles
2 years ago, in May 2018, for the first time the Corruption Eradication Commission (KPK) established a corporation as a perpetrator of money laundering. KPK named PT Putra Ramadhan or PT Tradha as a corporate suspect.
The corporate suspect is a continuation of the investigation of Muhammad Yahya Fuad as the corporate’s controller who also served as the Regent of Kebumen 2016-2021. Yahya was first charged by the KPK over alleged cases of accepting bribes and gratuities related to a number of projects in his area.
Corporations are often used to conceal the identity of perpetrators as well as money laundering (TPPU) and criminal acts of financing terrorism (TPPT). Corporations like this are called corporate vehicles, where corporations are used as ‘money laundering vehicles’.
Various types of modus operandi in money laundering can be carried out by corporations. The following are typologies or groupings of the different modus operandi according to the Financial Action Task Force (FATF):
1. Compilation of complex corporate structures
The complex corporate structure aims to conceal perpetrators’ identities. This complicated structure easily diverts money flow or hides payments. Therefore, it would be difficult to find out who the perpetrators are.
2. The involvement of financial experts (Gatekeepers)
In many cases of money laundering, financial experts are often involved in carrying out plans (Gatekeepers). The involvement of financial experts also varies, from helping to conceal money laundering activities, facilitating activities, to being a corporate advisor in implementing money laundering strategies.
3. Utilization of the identity of close-associates
The FATF states that corporations usually use the identity of candidates, such as prospective clients, prospective shareholders, or prospective directors, to conceal the true identity of the perpetrators by transferring funds to the candidates.
4. Use of a shell company
A shell company is a company that is formally established based on applicable law but is not used to carry out business activities. A shell company is established only to carry out fictitious transactions or save the assets of its founder or others to disguise the actual ownership of those assets.
‘Money laundering vehicles’ risk can be reduced significantly if information about beneficial ownership of the business entity, sources of assets, assets, and corporate activities are accessible to the authorities.
Written by: Aqilla N