// IFF605 — Shell companies, nominees and the corporate veil
$CATEGORY: VERITAS/IFF605

::IFF605-Q1::Under FATF Rec. 24 (as revised 2022), member countries must\: {
    ~Maintain a public UBO register#Incorrect. The revised Rec. 24 requires competent-authority access; public accessibility is encouraged but not universally required (and was partly curtailed in the EU by the 2022 CJEU judgment).
    =Ensure adequate, accurate and up-to-date UBO information is accessible to competent authorities#The revised Rec. 24 requires competent-authority access; public accessibility is encouraged but not universally required (and was partly curtailed in the EU by the 2022 CJEU judgment).
    ~Prohibit shell companies#Incorrect. The revised Rec. 24 requires competent-authority access; public accessibility is encouraged but not universally required (and was partly curtailed in the EU by the 2022 CJEU judgment).
    ~Require in-person incorporation#Incorrect. The revised Rec. 24 requires competent-authority access; public accessibility is encouraged but not universally required (and was partly curtailed in the EU by the 2022 CJEU judgment).
}

::IFF605-Q2::A shelf company differs from a shell company because it\: {
    ~Is illegal in all FATF member states#Incorrect. Shelf companies are deliberately aged shells sold ready-to-use.
    =Has been aged deliberately to be sold with a history#Shelf companies are deliberately aged shells sold ready-to-use.
    ~Cannot hold a bank account#Incorrect. Shelf companies are deliberately aged shells sold ready-to-use.
    ~Is always cross-border#Incorrect. Shelf companies are deliberately aged shells sold ready-to-use.
}

::IFF605-Q3::The most reliable way to pierce a multi-jurisdictional corporate veil is\: {
    ~A single company registry search#Incorrect. Beneficial-ownership investigation is inherently triangulated across many sources.
    =Triangulation across registries, leaks, and cross-border FIU cooperation#Beneficial-ownership investigation is inherently triangulated across many sources.
    ~Waiting for the entity to file annual accounts#Incorrect. Beneficial-ownership investigation is inherently triangulated across many sources.
    ~Requesting bank statements from the shell#Incorrect. Beneficial-ownership investigation is inherently triangulated across many sources.
}

::IFF605-Q4::A shelf company is\: {
    ~A company that sells shelving#Incorrect. Shelf companies are aged, dormant entities sold to buyers seeking the appearance of an established trading history.
    =A pre-registered dormant company held for later sale to give a buyer instant corporate history#Shelf companies are aged, dormant entities sold to buyers seeking the appearance of an established trading history.
    ~A company registered on a stock exchange#Incorrect. Shelf companies are aged, dormant entities sold to buyers seeking the appearance of an established trading history.
    ~A charitable foundation#Incorrect. Shelf companies are aged, dormant entities sold to buyers seeking the appearance of an established trading history.
}

::IFF605-Q5::Registry triangulation typically combines\: {
    =Land, corporate and tax records#Cross-referencing land registry, corporate BO register and tax records exposes most opacity structures at effectively zero marginal cost.
    ~News clippings only#Incorrect. Cross-referencing land registry, corporate BO register and tax records exposes most opacity structures at effectively zero marginal cost.
    ~Social media alone#Incorrect. Cross-referencing land registry, corporate BO register and tax records exposes most opacity structures at effectively zero marginal cost.
    ~Bank statements alone#Incorrect. Cross-referencing land registry, corporate BO register and tax records exposes most opacity structures at effectively zero marginal cost.
}

::IFF605-Q6::Wolfsberg Correspondent Banking Principles principally address\: {
    ~Retail deposit insurance#Incorrect. The Wolfsberg CBB Principles set out CDD, EDD, and disclosure requirements, with special attention to nesting and payable-through accounts.
    =Enhanced due diligence on respondent banks and disclosure of nested relationships#The Wolfsberg CBB Principles set out CDD, EDD, and disclosure requirements, with special attention to nesting and payable-through accounts.
    ~Interest-rate risk#Incorrect. The Wolfsberg CBB Principles set out CDD, EDD, and disclosure requirements, with special attention to nesting and payable-through accounts.
    ~Consumer credit#Incorrect. The Wolfsberg CBB Principles set out CDD, EDD, and disclosure requirements, with special attention to nesting and payable-through accounts.
}

::IFF605-Q7::A single natural person appearing as director for 10,000+ entities across dozens of jurisdictions is\: {
    ~Normal in high-volume commerce#Incorrect. Nominee-director concentration of this magnitude is by itself a red flag — no natural person can meaningfully direct thousands of unrelated companies.
    =By itself a red flag#Nominee-director concentration of this magnitude is by itself a red flag — no natural person can meaningfully direct thousands of unrelated companies.
    ~Only relevant if the entities are related#Incorrect. Nominee-director concentration of this magnitude is by itself a red flag — no natural person can meaningfully direct thousands of unrelated companies.
    ~Only relevant if the person is a PEP#Incorrect. Nominee-director concentration of this magnitude is by itself a red flag — no natural person can meaningfully direct thousands of unrelated companies.
}

::IFF605-Q8::Bearer shares were abolished or immobilised in most jurisdictions because they\: {
    ~Were too expensive#Incorrect. Bearer shares, where possession equalled ownership without register entry — were the ultimate opacity tool, dismantled under sustained FATF pressure (BVI 2005, Panama 2015, Marshall Islands 2018).
    =Made beneficial ownership impossible to trace#Bearer shares, where possession equalled ownership without register entry — were the ultimate opacity tool, dismantled under sustained FATF pressure (BVI 2005, Panama 2015, Marshall Islands 2018).
    ~Were technically difficult to print#Incorrect. Bearer shares, where possession equalled ownership without register entry — were the ultimate opacity tool, dismantled under sustained FATF pressure (BVI 2005, Panama 2015, Marshall Islands 2018).
    ~Violated banking secrecy#Incorrect. Bearer shares, where possession equalled ownership without register entry — were the ultimate opacity tool, dismantled under sustained FATF pressure (BVI 2005, Panama 2015, Marshall Islands 2018).
}

::IFF605-Q9::The 'letter of wishes' in a trust is\: {
    ~A legally binding trust deed#Incorrect. The letter of wishes is non-binding but expresses the settlor's intent, it routinely reveals effective control and is often the single most probative document.
    =A non-binding document from settlor to trustee expressing intent, often the most probative single document#The letter of wishes is non-binding but expresses the settlor's intent, it routinely reveals effective control and is often the single most probative document.
    ~The trustee's annual report to beneficiaries#Incorrect. The letter of wishes is non-binding but expresses the settlor's intent, it routinely reveals effective control and is often the single most probative document.
    ~A tax declaration to the settlor's home jurisdiction#Incorrect. The letter of wishes is non-binding but expresses the settlor's intent, it routinely reveals effective control and is often the single most probative document.
}

::IFF605-Q10::Nested correspondent banking is dangerous because\: {
    ~The correspondent charges higher fees#Incorrect. In a nested arrangement the correspondent sees only the respondent — not the further downstream bank or its clients. Every major post-2010 correspondent enforcement action featured nesting.
    =The correspondent cannot see the downstream bank's clients#In a nested arrangement the correspondent sees only the respondent — not the further downstream bank or its clients. Every major post-2010 correspondent enforcement action featured nesting.
    ~The respondent is prohibited from filing STRs#Incorrect. In a nested arrangement the correspondent sees only the respondent — not the further downstream bank or its clients. Every major post-2010 correspondent enforcement action featured nesting.
    ~It only occurs in high-risk jurisdictions#Incorrect. In a nested arrangement the correspondent sees only the respondent — not the further downstream bank or its clients. Every major post-2010 correspondent enforcement action featured nesting.
}