Detecting the Presence of Individual Nominees

You should understand the point of view of a bank compliance officer when contemplating using the services of nominees.

Detecting the Presence of Individual Nominees

When the professional experience speaks

An individual working for a Trust and Corporate Services Provider, a Certified Public Accountant or a Law firm is likely to perform nominee duties, common fact.

Identifying the professional experiences is a must in a compliance process, to google a name and to find a LinkedIn account, trace of attendances and speeches at conferences, membership in professional organizations etc. is a fast and easy process.

When the individual is not part of a profession known for providing nominee services the relevance of his/her experiences is essential.

Without knowledge and skills related to the company activities, an individual acting as director and/or shareholder of a company is highly suspicious so is someone currently employed and taking a director/shareholder position with a company in direct competition with his/her employer.

When the residence speaks

The individual shareholder of a very successful company is living in a small flat in a suburb area? Living standards should be in accordance with the position held and this often reveals issues as most of the individuals requesting nominee services don’t pay attention to this kind of details.

The employees of a provider of nominee services can’t, for most of them, afford high rents and this with the understanding that most of the world population is dedicating 40% or more of their income on housing is a good indicator.

Searches of rents on similar locations, searching property ownership is allowing the discovery of living standards.

Absence of information

With a good OSINT (Open-source intelligence), the compliance will find information, especially if the search is conducted intensively in a few countries.

The absence of information after a 2 hours search will be a red flag as we are living in a new era of transparency, everybody leaves traces except some inactive individuals.

The inactivity is an indicator that the individual is a family member or a friend of the real beneficial owner, shadow director of the company.

Common and specific business knowledge

The compliance process, often belittle to a tick-in-the box process by detractors, should integrate in addition to document-based searches an interview with the client, during talks it will be essential to address specifics business topics.

Relationships managers with Financial Institutions have been trained to get answers, so are the providers of corporate services, legal and financial services.

Requests about the market environment, acquisition and management of clients, specificities of products and services.

Most importantly the interview should be prepared in advance to obtain prior the meeting a sufficient level of understanding about the situation, so enabling the detection of misrepresentation of facts.

Bank signatory powers and Power of Attorney

For a Financial institution: a director without bank account signatory powers is the most obvious red flag of the nominee presence, with technology the location of the account’s signatory is also transparent and will reveal a nominee arrangement.

Some nominee services providers agree to issue a Power Of Attorney to the beneficial owner, this approach is outdated and dangerous as exposing the director to responsibilities. Additionally, a POA will cause serious issues if the company wish to obtain a tax residence certificate.

Bank Compliance Officer

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