A presentation to AML and investigative groups at Standard Chartered Bank on shell companies using a case study of Erik Vanagels.

1. Christian Focacci, CIO
TransparINT, LLC
Phone: (973) 251-9951
Email: chris@transparint.com
Web: http://transparint.com
Web of Shell
Companies
Case Study on Erik Vanagels
Presented by

2. 2
Background
• Erik (also spelled Erick or Eric)
Vanagels is the name of a
nominee who at one point was
listed as a director of several
thousand global companies.
• Companies connected to
Vanagels have been linked to
money laundering, illegal arms
smuggling, government
corruption, and organized crime.
• Vanagels’ addresses are often listed in Latvia, but he is
also connected to addresses in Panama as well.

3. 3
Global Scope
Source:
https://opencorporates.com/

4. 4
Illicit Activity
Case Name Countries Involved Activity
The Faina vessel Case Ukraine / Sudan Illicit Arm Trading
The Chernomoreneftegas Case Ukraine Gov. Corruption
The flu vaccines Case Ukraine Gov. Corruption
The Ukrspetseksport Case Ukraine Illicit Arm Trading
The Rockford Funding Case Latvia Financial Fraud
The Moldavian Cases Moldavia / Romania Gov. Corruption / Fraud
The Hermitage Capital Management Case Russia / Switzerland Massive Money Laundering
The Trade Construction Company LLC Case Russia Financial Fraud
Hoa Le Duc’s Mafia Case Romania / Vietnam / China Organized Crime
The EURO 2012 Case Ukraine Corruption
The Mexicam Sinaloa Drug Cartel Case Mexico Organized Crime / Drug
The GT Group Case North Korea / Iran Illicit Arm Trading / Terrorism financing
The ex.ua file-exchange Case Ukraine Massive Internet Piracy
The forextime.com Case Russia / New Zealand / Nigeria Money Laundering / Fraud
Source: http://www.nakedcapitalism.com/2014/05/new-zealand-shell-company-incorporation-franchises-ii-and-ukraine.html

5. 5
Possible Related Parties
Linked Nominees:
• Juri Vitman
• Voldemar Spatz
• Inta Bilder
• Stan Gorin
• Elmar Zallapa
Linked Corporations:
• Milltown Corporate Services
• Ireland and Overseas Acquisitions
• Systemo AG
• Cascado AG
• Brooksell Universal Limited
• Panamanian Houseberg Impex Inc
• Falcona Systems Limited
• Highway Investment Processing LLP
• Interhold
• Olden Group LLC
• Ridemax Systems Inc
• Waterlux AG
• International Overseas Limited
Visit this link for a more exhaustive list:
https://opencorporates.com/officers?utf8=
%E2%9C%93&q=Vanagels&commit=Sear
ch

6. 6
Money Flow Example
Offshore
Registered
Company
Latvian Bank
Electronics,
auto parts,
and luxury
goods
US BankRussian Bank
US Account
Holder
$
$ $
$
Originator Beneficiary

7. 7
Transaction Red Flags
• Payments have no stated purpose, do not reference goods or services, or
identify only a contract or invoice number.
• Goods or services of the company do not match the company’s profile
based on information previously provided to the financial institution.
• Transacting businesses share the same address, provide only a registered
agent’s address, or raise other address-related inconsistencies.
• An unusually large number and variety of beneficiaries receive wire
transfers from one company.
• Frequent involvement of beneficiaries located in high-risk, offshore
financial centers.
• Multiple high-value payments or transfers between shell companies with
no apparent legitimate business purpose.
Source: http://www.fincen.gov/statutes_regs/guidance/html/AdvisoryOnShells_FINAL.html#1

8. 8
Potential Monitoring Risk Example
UK Company
Low Risk Geography
Latvian Bank Account
Higher Risk Geography
US Client
A
B
A. A transaction monitoring system may see this as a lower risk
transaction since the originator and beneficiary are both in low risk
countries
B. But the transaction is actually originating in a higher risk geography

9. 9
Investigative Techniques
• Utilize corporate registers, web, and
news sources
• Identify & map network of related parties
• Search wire activity for counterparties
• Search wire activity multiple levels deep

10. 10
Take-Aways
• The risk is in the opacity of the true originator of the
transactions
• Vanagels, and similar nominees, are not the masterminds,
but an indicative risk indicator
• Shell companies and nested corresponding banking clients
add significant complexity
• Without negative media related to a company, individual, or
address, transaction patterns are the main way to identify
future cases of this type of activity
• Stay focused on your financial institution’s exposure to risk

11. 11
Appendix

12. 12
Investigative Resources
• List of international corporate registries
http://corpsearch.net/
• Open Corporates (search engine for incorporation records)
https://opencorporates.com/
• Archived Panamanian Corporate Register Search
http://ohuiginn.net/panama/
• New Zealand Companies Office
https://www.business.govt.nz/companies
• ICIJ’s Offshore Database
http://offshoreleaks.icij.org/search
• TransparINT - Negative Media Search Platform
https://search.transparint.com/

13. 13
Vanagels Reference Resources
• New Zealand: the Shell Company Incorporation Franchises (II) (and Ukraine),
Published on May 13, 2014, http://www.nakedcapitalism.com/2014/05/new-
zealand-shell-company-incorporation-franchises-ii-and-ukraine.html
• Fraud trail leads to OAP’s tiny flat, Published on June 16, 2013,
http://www.duncancampbell.org/content/fraud-trail-leads-oap%E2%80%99s-tiny-
flat
• Massive Ukrainian Government Money-Laundering System Surfaces,
Published on June 07 2011,
http://www.lucorg.com/news.php/news/5174/popup/true
• Homeless Vanagels, partner of Ukrainian Naftogaz, Uploaded on Dec. 21,
2011, https://www.youtube.com/watch?v=_k9_0VoVcvA

14. 14
Questions?
Christian Focacci, CIO
TransparINT, LLC
Phone: (973) 251-9951
Email: chris@transparint.com
Web: http://transparint.com