[FinCEN Files] ①Searching for S. Korean fronts of money laundering shell companies

2021년 09월 21일 08시 00분

The Korea Center for Investigative Journalism(KCIJ)-Newstapa found two South Korean nationals who have been registered as directors of hundreds of shell companies by analyzing more than 20,000 suspicious activity reports (SAR), which were leaked from the Financial Crimes Enforcement Network (FinCEN), a division under the U.S. Department of Treasury.
The shell companies the South Koreans were registered are presumed to be ones that were used for transnational money laundering networks’ financial crimes. 
Names of these two Koreans are Youngsam Kim and Dong Hee Kang.
A transnational money laundering network establishes shell companies and sets up banks accounts with the companies’ names to eventually generate fake trading transactions or loans. It makes up complicated financial transactions in an effort to hide dirty money or launder dirty money into normal, spendable money.
In the process, the network puts up frontmen, often called the ‘proxies,’ to be each shell company’s directors or shareholders to hide real money owners. 
The two Koreans, Youngsam Kim and Dong Hee Kang, seem to have played the role of proxies of shell companies, which are set up and operated by transnational money laundering networks. Kim has been registered as directors of more than 450 companies, making him one of the top tier proxies. 
▲Proxies are frontmen whose name and personal information are used as executives of shell companies, which transnational money laundering networks often set up to move dirty money while hiding the identity of real money owners. 
In the shell companies’ corporate documents, Kim is introduced as being born in 1970. There were two home addresses, one in London and one in Sinseol-dong, Dongdaemun District, Seoul.
A couple of SAR documents, which global banks submitted to the FinCEN, explained that Kim was registered as a director of 457 companies in the U.K., India, New Zealand, Utah and other tax haven jurisdictions. The documents also explained that Kim is known to be linked with Ukrainian corrupt politicians, including former Ukrainian president Viktor Yanukovych. 
Kim was found to be linked with a money laundering network based in East European and Central Asian countries, according to the Organized Crime and Corruption Reporting Project (OCCRP) investigations in 2015. Back then, the OCCRP found records of Kim jointly being registered as a director at shell companies along with Latvian nationals, Juri Vitman, Stan Gorin and Eric Vanagels, or being registered as a successor director after them. 
“Gorin, Vanagels, and Vitman are linked as directors and shareholders for hundreds of companies in the UK, New Zealand, US, Ireland, Cyprus as well as companies in classic offshore jurisdictions such as the British Virgin Islands and Panama,” one of the SAR documents reviewed by KCIJ-Newstapa reporters. “The companies they control in turn serve as the directors or shareholders of hundreds or perhaps even thousands of more companies.”
▲One of the Korean proxies was found to be linked with a money laundering network based in East European and Central Asian countries, which was exposed by OCCRP in 2015.
“Stan Gorin, Erik Vanagels, Voldemar Spatz, Juri Vitman, Danny Banger are involved into a number of criminal cases, which are connected with a fraud scheme of tax refunds in Russia,” the report explained. “Media reports allege that the companies have ties to Russian and Latvian organized crime.”
Milltown Corporate Services Ltd, which was directed by Vanagels and Gorin, were “identified as the owners of numerous shell companies and also involved in money laundering, illicit arm trading, government corruption, and drug trading.”
Kim’s name first appeared in the U.K. Companies House corporate registration data in December 2011, and he was repeatedly named and resigned from director positions until 2015, KCIJ-Newstapa found. As of September 2020, Kim remains as a director of five companies. 
The reporters checked Kim’s two addresses. His London address was found to be a company formation agency, and his older brother resided at his Seoul address. When the reporters met Kim’s older brother in 2015, he explained that Kim migrated to Lithuania to do a business. There was only one South Korean national named Youngsam Kim doing a business in Lithuania. This businessman residing in the capital city of Vilnius had the same birth year as Youngsam Kim the reporters were looking for.
To check if the Vilnius businessman is the same person, the reporters reached out to request him to check personal information and signatures written in the shell companies’ corporate documents. He answered that the personal information matched his own, but the signatures were not his, adding that it seems like his name was stolen for some reason.
▲Youngsam Kim, a Lithuania-based South Korean businessman, denied his connection with the shell companies, while admitting personal information in the shell company corporate documents matched his but the signatures were not his.
Another Korean proxy Dong Hee Kang was also found to be linked with the Vitman group, one of infamous transnational money laundering networks. Kang has been registered as a director at 108 shell companies.
Kang is a famous figure among anti-money laundering experts, because he succeeded the director position of many shell companies since 2018 after another infamous proxy Ali Moulaye stepped down. Moulaye is known as a Latvian proxy who had his name as an executive of 385 shell companies. 
Kang was linked with not only Moulaye but also the Vitman group, a transnational money laundering network which Youngsam Kim was related with. KCIJ-Newstapa found. Kang held directorship of shell companies along with Vitman and his colleagues. 
The reporters reached out to Dong Hee Kang, a Ukrainian resident whose name is the same as the proxy. Kang answered that he had no idea of the shell companies, and the signatures on the corporate documents were not his. v
It remains uncertain if both Youngsam Kim and Dong Hee Kang are the same individuals with the two proxies, or if both really got their names and personal information stolen by these transnational money laundering networks.
However, one certain thing is that South Korean nationals were mentioned in the FinCEN, a U.S. Department of Treasury division in charge of monitoring financial crimes, and closely researched by anti-money laundering experts across the globe. 
Whether the two individuals got their names stolen or they’re truly at the edge of money laundering as proxies, the circumstance is not good for Korea.
Graham Barrow, a long-time anti-money laundering expert who researched transnational financial crime networks, said the proxies -- individuals who lend their identities to financial crime organizations -- largely can be categorized in three types. 
“Some of the proxies are trusted lieutenants and therefore are involved in on the margins of criminality,” Barrow said at the joint interview with the cross-border investigation team. “Some of the proxies don’t even know that they’re proxies. I’ve found examples of people who have no idea that their names have been used on paperwork and haven’t benefited in any way whatsoever. And there’s probably a few in between who get paid a few euros or a few pounds for their efforts but fully understand what it is they’re doing.”
ReportingYongjin Kim, Wooram Hong, Myungju Lee
Video ReportingHyoung-seok Choi, Sang-chan Lee
Video EditingJi-sung Jung
CGDong-woo Jung
DesignDo-hyeon Lee