Uncovering the size of the illegal corporate service provider industry in the Netherlands: a network approach

Economic crimes such as money laundering, terrorism financing, tax evasion or corruption almost invariably involve the use of a corporate entity. Such entities are regularly incorporated and managed by corporate services providers (CSPs). Given this potential for enabling economic crime, the CSP industry in the Netherlands is heavily regulated and CSPs require a license to operate. Operating without a licence is illegal. In this paper, we estimate the size of the illegal CSP sector in the Netherlands. For this, we develop a classification method to detect potentially illegal CSPs based on thei... Mehr ...

Verfasser: Garcia-Bernardo, Javier
Witteman, Joost
Vlaanderen, Marilou
Dokumenttyp: Artikel
Erscheinungsdatum: 2022
Schlagwörter: Corporate service providers / Economic crime / Netherlands / Network analysis / Modelling and Simulation / Computer Science Applications / Computational Mathematics
Sprache: Englisch
Permalink: https://search.fid-benelux.de/Record/base-27221557
Datenquelle: BASE; Originalkatalog
Powered By: BASE
Link(s) : https://dspace.library.uu.nl/handle/1874/425180

Economic crimes such as money laundering, terrorism financing, tax evasion or corruption almost invariably involve the use of a corporate entity. Such entities are regularly incorporated and managed by corporate services providers (CSPs). Given this potential for enabling economic crime, the CSP industry in the Netherlands is heavily regulated and CSPs require a license to operate. Operating without a licence is illegal. In this paper, we estimate the size of the illegal CSP sector in the Netherlands. For this, we develop a classification method to detect potentially illegal CSPs based on their similarity with licensed CSPs. Similarity is computed based on their position within the network of directors, companies and addresses, and the characteristics of such entities. We manually annotate a sample of the potential illegal CSPs and estimate that illegal CSPs constitute 31–51% of the total number of CSPs and manage 19–27% of all companies managed by CSPs. Our analysis provides a tool to regulators to improve detection and prevention of economic crime, and can be extended to the estimation of other illegal activities.