Proactive Risk Management – A Case Study

Whether it’s recording an episode of “The Dark Money Files” or when I’m presenting to banks, or just having discussions with like-minded people, I often talk about proactive risk management.

It’s such an interesting topic I thought I’d write up an example I came across today.

At the outset, and just to be clear, this is all about recognising potential red flags and not about uncovering criminal activity. That’s not the job of the investigator, nor yet the MLRO. It is the role of the NCA or Regional Economic Crime Unit or its equivalent in whichever country you are reading this.

Our job is to identify unexplained or suspicious activity that merits further investigation.

One of the things I like to do is monitor current news stories to see if there is anything which could help inform ongoing risk management. One such story cropped up today in the Washington Post.

Here’s a screen capture of the headlines.

A story like this is always likely to be of interest here in the UK given the huge Central and Eastern European presence in so many of our legal entities. So I thought I’d take a closer look.

I quickly established that there was no Aleksandr Musienko acting as a director or designated member of any UK entity, but a search on Open Ownership did reveal that an Alexander Musienko was the PSC of a Scottish Limited partnership. Albeit this Musienko was listed as Russian but I still thought it was worth a look.

Companies House tells me that the SLP is called Cortac Trade LP and it was registered on 20 April 2017 to an address in Rose Street, Edinburgh, home to more than 1660 other entities. Its General and Limited partners were Solter Management Ltd and Monter Impex Ltd respectively. I’ve come across these companies before.

That’s not too surprising given that they are also designated members to around 80 UK LLPs, one of which, for example, is called Middleford Industries LLP. Back in February 2014 it filed a set of accounts signed by Ali Moulaye. Who’d have guessed.

Now I’m very interested. Let’s look a bit closer. Cortac Trade LP has had one previous PSC prior to Mr Musienko and that was called Cortac Holding LP. This time, it was not a Scottish Limited Partnership but an English one (and hence, no PSC requirement).

But even English LPs need to declare General and Limited partners so let’s see who they are. Cortac Holding LP was registered on 25 September 2017 (oddly some months after Cortac Trade was registered). The General and Limited Partners for Cortac Holding LP were Fiorteks Impex Limited and Dumstreks Impex Ltd respectively. Now they also just happen to be the directors for a now defunct company called Glenway International Ltd which is handy as the Glenway paperwork tells me that their other two directors are Eva Bodnar and Lajos Balog, both Hungarian.

Why is this handy?

Here’s a screenshot from the Cortac Holding incorporation document.

It’s actually quite hard to read but I’ve got a suspicion it’s the same two people.

Now let’s look at the incorporation document for our original SLP, Cortac Trade.

Two things are immediately noticeable.

1. They are the same signatures
2. One of them is definitely Eva Bodnar (signed in the Hungarian fashion).

The other one is indecipherable but I have a hunch I know who it is.

Let’s go back to Mr Musienko, our PSC.

One of the obvious differences between him and the man in the newspaper report is that he is listed on Companies House as being Russian and the man in the newspaper report is said to be Ukrainian. So it might be worthwhile exploring the address given on the CH website.

Which is 116/1-54 Leninsky Avenue, Moscow, Russia, 119415. Which turns out to be a real address.

In fact, here it is:

Very nice.

One other thing I found when researching this specific address was that a gentleman called Andrey Butorin is listen in the Panama Papers as living at 116/1-56 Leninsky Prospekt. Virtually next door to Mr Musienko at 54.

There’s one last twist to this story.

On 4 April 2018, both the General and Limited Partners resigned but no-one was appointed in their place. However that didn’t stop them filing their annual confirmation statement on 19 April with no changes appearing on the form.

EDIT: I was guilty of not reading carefully enough as it turns out that when Solter Management Ltd and Monter Impex Ltd resigned they were replaced by Fiorteks Impex Ltd and Dumsteks Impex Ltd. And if those names seem familiar it’s because they were also (barring a typo on the latter) the General and Limited Partners of Cortac Holdings LP which was the PSC for Cortac Trade LP. It ceased to be the PSC the day before its partners also became the partners for Cortac Trade LP. Are you still with me?

And what does all of this mean?

I’m not entirely sure. Neither of the Cortac Limited Partnerships (Holding or Trade) have any online presence at all and  there is nothing to suggest that the Mr Musienko named in the documentation has anything to do with the Ukrainian gentleman who was extradited from South Korea to the USA as detailed in the WaPo story.

On the other hand, if I held the bank accounts for either of the Cortac companies, given the information I obtained as outlined above, I might just want to check my due diligence to make sure I’m happy with the relationship and risk rating.