Fraud Prevention: Attributes of Fraudulent or Shell Companies are Successfully Identified in Russia
According to the Federal Tax Service of Russia (FTS – authority responsible for registrations and taxation) as of March 1, 2019, 4 million active companies are registered in Russia, on 4,7% or 187 thousand companies attributes of fraudulent or shell ones have been found by this competent body.
The FTS, taking strong measures against shell (in practice – inactive) and fraudulent companies since 2016, has worked up the list of following attributes that may speak for dubious features in company’s activities, in particular such as:
- registration and trading address are different
- frequent change of registration address
- no lease agreements with working premises owners
- company age – young
- company or sole entrepreneur is represented by trustees registered in another region
- change of company’s management just before the filing of annual accounts
- inaccurate information on address, director, shareholder filed in the EGRUL-Register
- directors or shareholders are non-residents of Russia
- multiple filing of zero annual accounts
- equality of income and expenditure with minimum profit
- lack of employment data / single employee registered
- lack of open bank account / closure of all bank accounts / over 10 bank accounts are open
- cash flow without account balance
- registration of company and opening of bank accounts in different regions
How to find out that a Russian third party you have to do business with may be a fraudulent or shell one?
The aforementioned attributes together with other significant signs are taken into account by evaluating Russian companies within the credit management solution developed by Credinform Russia https://credinform.ru/en-GB/Products/companyResearch – The Information and Analytical system Globas https://globas.credinform.ru/en-GB/home/auth. They offer a special scoring that estimates if a Russian company of interest might 
be a dubious one. This scoring among solvency, likelihood of bankruptcy checks is available online and also in comprehensive fresh investigations on Russian companies performed by a local Russian company data provider.
