Letterbox fraud: Red flags found at almost 380,000 Dutch companies

Money laundering, tax evasion, and sanctions evasion through shell companies are a “stubbornly persistent risk” worldwide, and also in the Netherlands, according to a report by the British economic research agency Moody’s Analytics. The agency’s researchers found nearly 380,000 red flags in the Netherlands indicating that businesses might be shell- or letterbox companies abused by financial criminals, NOS reports.

Moody’s looked for striking deviations at companies around the world - things like directors who are very old or very young, many businesses registered to one address, or directors who are the boss at remarkably many companies. According to Moody’s, these are all indications that something is wrong, and people should be extra cautious about doing business with such a company.

Worldwide, Moody’s found 21 million red flags, including nearly 380,000 in the Netherlands. The Netherlands' biggest problem is mass registration - when many companies are registered in one place.

“The Netherlands stands out especially in mass registration, as number four in the EU and ninth worldwide,” Moody’s Analytics director Francis Marinier said. “It can be a way to hide illegal activities - by spreading assets and transactions across multiple entities, making it harder for authorities to track the flow of money.”

The most extreme example of mass registration in the Netherlands is in Muiden, where 403 companies are registered at one address. However, that pales in comparison with some global examples - 22,686 businesses are registered at the Pyramid of Giza in Egypt, and a small shopping center in Pretoria, South Africa, counts even 61,000 businesses.

Another of Moody’s red flags is directors who are weirdly old or young. In the Netherlands, the researchers found 38 companies with weirdly aged directors. The youngest is 5 years old, and the oldest was born in 1915.

Worldwide, Moody’s discovered over 2,000 directors over the age of 123 years - the oldest person ever died at the age of 122. They also found 4,500 directors younger than five. The oldest director they found is a 943-year-old minority shareholder of a Belgian company founded in 2018.

According to Moody’s Analytics, shell companies use deceased or non-existent directors to keep their actual shareholders and directors out of the picture.