There are various tactics which individuals can employ for hidden assets in an attempt to put them beyond the reach of the courts, or creditors. Typically, this will involve spreading their wealth across a variety of asset classes and the use of offshore jurisdictions.
An asset is defined as “an item of property owned by a person or company, regarded as having value and available to meet debts, commitments or legacies.”
Criminals or fraudsters will have hidden assets in an attempt to prevent paying taxes, avoid civil forfeiture, or apprehension. At a basic level they will employ friends or family to assist them, or if they are more creative, they will use worldwide offshore accounts which are disguised by shell companies.
It is not just criminals who go to such lengths and Spouses who are undergoing or preparing for divorce proceedings often have hidden assets by: placing cash in a safe place, underreporting income or tax returns, deferring salary or receipt of a work-related bonus, transferring stock, or setting up a custodial account.
The various asset classes which people utilise to hide wealth include:
- Cash at bank – Most people are attracted to the accessibility of cash and use accounts in high street accounts or offshore banks to hide at least part of their money. The account will be opened utilising fake credentials or a third party, which makes it incredibly hard to trace.
- Moveable assets – This include items such as cars, high-end paintings, expensive wine, jewellery, yachts or airplanes. Much like cash, this form of asset is highly desirable, as it is typically easy to move and conceal (either physical, or its ownership) and pleasure can also be derived from it.
- Real Estate – This encompasses: residential, commercial, industrial and land. People can invest in a classic residential property, commercial property, such as an offices or restaurants, industrial warehouses, or purchase a plot of land and hide their ownership by doing so through a third party, or subsequently transferring ownership to family members.
- Equities – Equity is purchased in a company and individual ownership is concealed by utilising a company registered in an offshore jurisdiction to make the transaction or by subsequently transferring the holding to family or friends.
- Cryptocurrencies – The newest and perhaps most significant new asset class in recent years is cryptocurrency; a virtual currency which can either held as an asset in its own right, or utilised to make online transactions. The best-known example of a cryptocurrency is bitcoin and this is well known to be utilised by criminals in order to hide money. As bitcoins are virtual assets, this enables an individual to easily conceal their ownership in a virtual wallet, which is incredibly hard to track; in part facilitated by the lack of worldwide legislation to regulate the industry.
Offshore Jurisdictions
Offshore jurisdictions can be used for perfectly legally for activities such as tax avoidance, however; they are more synonymous with illegal activities such as tax evasion (non-residents evading tax in their actual country of residence) and money laundering (returning criminal/illegal money back into circulation). The prime reason they are attractive to criminals, is their inappropriately high level of client confidentiality; enabling criminals to operate within them with relative impunity.
Individuals and companies alike exploit offshore jurisdictions and as a general rule, the wealthier they are, the more embedded they are; with some having hundreds of offshore subsidiaries. In 2017, it was estimated that individuals had hidden $8.7 trillion. Whereas much of this money may be clean, a sizeable amount could be considered dirty and is doubtless being laundered by criminals who are exploiting the secrecy of offshore jurisdictions for illegal activities such as money laundering. In sophisticated cases, they do so by utilising complex mechanisms, spanning several countries, with a chain of intermediaries and a network of shell companies, offshore structures and nominee arrangements to mask their activities and hide the identity of ultimate beneficial owners (the person/s who invest in, control, or otherwise benefit from an asset, such as a bank account, real estate property, company, or trust).
What can be done to find hidden assets?
Asset Tracing is the process whereby investigators conduct specialist financial enquiries to determine a subject’s wealth, their assets and where and how they are held. It is a highly complex series of protocols that requires expert professional support in any jurisdiction.
The process is often far from simple and can be highly complex and time-consuming and it is especially difficult for those working in the context of failed states, widespread corruption, or with limited resources. Other challenges include navigating data protection laws, treaties and jurisdiction specific legislation.
Matrix Intelligence understands the difference between intelligence and evidence required for use in a Court of Law. We have extensive knowledge of the legal system, enforcement regimes and cultural practices within the jurisdictions that we most commonly operate.
Before we accept any case, we first require sufficient details to enable us to conduct a preliminary investigation (at no cost to our client). Only then are we able to propose a coherent and phased strategy to meet both the client’s requirement and budget. We value integrity and if we believe that a case has little likelihood of a positive outcome (time and cost-efficient), we will advise accordingly.
Having conducted extensive multi-jurisdictional and cross border complex investigations, we are experts at assisting with commercial and high-end litigation.
We deliver reliable and actionable intelligence for lawyers, financial firms, corporate clients, third party funders and HNW individuals – worldwide. We operate internationally and have exceptional capabilities in Eastern Europe and all offshore banking jurisdictions. For more information, contact us at: info@matrix-intelligence.com or online at www.matrix-intelligence.com
