Terrorist Financing through the Purchase of Property

Indicators:

• UK Company registry checks via Companies House reveal that Client P’s name and date of birth were recorded differently to the actual facts, and a suspicion was formed that this was done intentionally. The accuracy of data on Companies House is known to be exploited by threat actors.
• Checks on the registered UK address for Company W revealed a generic residential street address that was associated with numerous unconnected company entities. 
• Company W had only recently been incorporated and had no financial trading history. 
• Client P’s UAE based company had links to an associated company in the Middle East, which open-source checks alleged owned an oil tanker, which was subject of OFSI Sanctions violations.
• Multiple adverse media alleged that Client P was circumventing sanction measures and involved in providing terrorist financing to sanctioned terrorist organisations.
  

‍

Suspicious Activity:

• The Jersey entity has a direct link to a fund that ultimately holds a significant London property via a loan.  
• The loan company has received an offer to buy the property, thereby repaying the loan from a newly formed UK company. 
• The adverse media alleged the owner of the London company as having links to Terrorist organisations, ostensibly to finance their activities. This was identified by a UK Law firm through due diligence checks. 
• Imagery research indicated that the UK company appeared to be registered at a residential address and had no trading history or anything to justify the purchase of a multimillion-pound property, suggesting it was a shell company.

‍

FIU Actions:

• This SAR was dual reported to the UK FIU.
• The FIU reviews all submissions and grades and prioritises them as appropriate.
• TF-related cases will always be the highest priority for immediate further work.
• Whilst all members of the FIU have training in TF matters, we have several with a more enhanced knowledge in TF matters, who maintain additional connections and a deeper understanding of potential TF typologies.
• A wide range of sources will be reviewed and checked to ascertain the facts of the submission and seek to expand our understanding.
• The FIU engages both domestically and internationally with specialist counter-terrorism units and other FIUs to share our initial findings and seek further information from relevant stakeholders.
• Consent was sought by the Jersey regulated institution to proceed with the sale, on the back of the dual reporting to the UK FIU, however this was not provided. It is noted that the UK have provided consent to transact under the DAML request sent by UK lawyers acting on behalf of the seller, however that is a different regime to the Jersey consent regime.

‍

Outcomes:

• The sale has not proceeded as a consent to transact was not provided by FIUJ.

‍

 FIU Comment:

• TF cases may also include ML red flags or business behaviour or facts that do not appear to make sense. The adverse media gave cause for concerns about the legitimacy of the activity. This has identified a likely typology of using funds to invest or layer in a London property. 
• The funds acquired to purchase the London property may have been derived from the proceeds of money laundering or terrorist financing and if the London property was to be purchased by Client P, the income derived from that property may in turn be used criminality used or for terrorist financing purposes.
• If the Fund were to receive the proceeds from the sale of the property to settle the loan, then there is a likelihood that the proceeds could taint the remaining fund and consequently these funds could be subject of potential freezing orders, which affect the underlying investors investment in the fund.

‍