According to an investigation by The Bureau of Investigative Journalism and the Observer, more than 168 shell companies in the United Kingdom are suspected of operating fraudulent crypto or foreign exchange trading schemes, around half of which are potentially linked to pig-butchering scams.
In fact, these organized crime groups were found to be using the UK as a “virtual base” for their operations while exploiting lax regulations to conduct fraud on an industrial scale, the investigation stated.
Pig Butchering Scams in the UK
Upon further analysis, the two media firms found that many of these firms are linked through domain registrations. Interestingly, a vast majority of company directors are Chinese residents, however, details about the real owners are limited due to inadequacies in the Companies House registration system.
Despite rampant fraudulent activities and concerns about potential money laundering via the UK, the country has mostly turned a blind eye. A similar sentiment was echoed by Margaret Hodge, MP and chair of the APPG on Anti-Corruption and Responsible Tax, who said that traffickers, drug smugglers, fraudsters, and scammers have been exploiting the UK’s lax and opaque corporate laws for years.
The British politician admitted that Companies House has failed to put up a fight despite being the first line of defense and highlighted the need to look into the information it is given and punish those who lie. She added,
“And it needs to be properly funded to fulfill its role. At present, it costs £12 to incorporate a company. Raising the fee to £100 would provide enough resources to our law enforcement without increasing costs for the taxpayer. Anything short of that and the world’s criminal and corrupt will see that they can continue to manipulate and exploit us.”
Loopholes
Pig butchering scams first originated in China. Also known by its Chinese name – shāzhūpán – because the attackers typically “fatten” or “groom” their victims before taking everything they’ve got. While these scams are more pronounced in the cryptocurrency sector, they still involve other types of financial trading as well.
One of the biggest reasons the pig butchering scams have managed to get a grip in the country is due to the loopholes in the UK’s company registration system that has been known for years. Anyone can register a company online for as little as £12 without the need to provide any proof of ID.
Individuals interviewed for the joint investigation had reported their cases to police forces in the UK or their home countries, the Financial Conduct Authority, or cryptocurrency exchanges which they had used to make transfers. However, none were successful in recovering funds.
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