What Is a Company Formation Agent?
Hidden assets, money laundering, tax dodging, and the firms that help make it all possible. Here’s how formation agents can facilitate abuse of the global financial system.
The name of her company — Corleone Caffe Trading Ltd. — echoed the fictional crime family of The Godfather trilogy. But Maria Concetta Riina was the daughter of a very real mafioso: Salvatore “Totò” Riina, one of the Cosa Nostra’s most notorious bosses.
Riina orchestrated a bloody reign of terror across Italy in the 1980s and 1990s as head of the Sicilian mafia. He famously ordered hits on two anti-mafia prosecutors within a few months of each other in 1992 — audacious murders that led to one of the country’s most extensive crackdowns on organized crime.
But her father’s past did not prevent Riina from opening the shell company. Corleone Caffe was registered in 2015 by Formations House, the UK company services firm at the center of a global investigation into a cache of its leaked data. (It is unknown what she used the company for, if anything.)
A collaboration with media partners Finance Uncovered, The Times, and IRPI uncovered that Corleone Caffe was a customer of Formations House, registered at its exclusive 29 Harley Street address.
The new findings appear to underscore how Formations House missed key red flags in its due diligence process, a failure that experts say exposes the UK and international financial system to potential abuse by criminals.
In December 2016, the UK’s anti-money-laundering regulator, HM Revenue and Customs, warned Formations House that it could face prosecution for its failure to carry out proper due diligence checks.
Formations House owner Charlotte Pawar said that the company has applied proper due diligence to customers and improved its processes since the 2016 audit. When asked about Riina’s companies, Pawar said all had been registered before she was “the operator” of Formations House, and that Riina was no longer a client. The formation agent’s previous owner was Pawar’s stepfather, Nadeem Khan, who died in September 2015 before he could face trial for money laundering-related charges.
British authorities charged Formations House founder Nadeem Khan in April 2014 with alleged involvement in a 100-million-euro fraud case. He was accused of facilitating money laundering through companies linked to Formations House, including Accounts Centre. But he died in September 2015 at age 54 before he could be tried.
Charlotte Pawar, the current owner of Formations House, told OCCRP that her stepfather, Khan, planned to argue that he sought prior permission from law enforcement to “provide services to a specific person and their businesses.” Although Pawar did not cite a name, this likely refers to Luis Nobre, a Portuguese conman who was jailed for 14 years in February 2016 for masterminding the fraud.
The prosecution rejected that assertion in their draft opening statement in Nobre’s forthcoming trial, arguing that Khan had received no approval. Prosecutors also highlighted a suspicious transaction by Khan – a fee of 160,000 pounds for selling Nobre’s firms four shell companies. The notes on Khan were crossed out in the draft document, presumably because he was deceased.
While Khan died before taking the stand, Accounts Centre was later penalised in a separate trial for this transaction. In January 2016, a High Court bankruptcy judge ordered the Formations House sister company refund the 160,000 pounds, as the fee did not reflect the commercial value of the shell companies.
"I am also satisfied on a balance of probability that this was not an arm’s length transaction and that there was some form of collusion between those who operate Formations House, Accounts Centre and Mr Nobre,” the judge wrote.
The company’s internal records were obtained by the information activist group Distributed Denial of Secrets and shared with reporters. In a statement to journalists, Pawar said that the data was reported as stolen and that the company has faced extortion attempts. She did not provide evidence to support these claims despite several inquiries from reporters.
Formations House’s business with family members and affiliates of the Cosa Nostra and the Camorra organized crime groups is the latest detail to emerge from a vast leak of Formations House data.
Formations House’s first known dealings with Maria Concetta Riina were in 2007, when it opened a UK business for her, together with her husband Tony Ciavarello and Katia La Placa, the daughter of Vincenzo La Placa, another notorious Italian criminal figure.
That company, T&T Corporation Limited, had its fingers in many pies in Italy, according to local media reports: As well as dabbling in the import and export of wine, oil, and coffee, it also operated an online lottery and even offered lightning-quick divorces.
From its early days, the company was plagued by problems, coming under investigation in 2009 by Italy’s Guardia di Finanza, a law enforcement agency that specializes in financial crime. The agency claimed the company had no licence to practice law.
Riina wasn’t indicted, and Ciavarello and La Placa were cleared in a December 2015 trial.
The Riinas’ troubles did not end there. On March 23, 2019, Italian authorities confiscated 1.5 million euros ($1.7 million) from the family as the proceeds of the infamous Totò Riina’s criminal activity.
Ciavarello has said he prefers to invest abroad through agents like Formations House as he is constantly in the crosshairs of Italian investigators. “[The Italian authorities] don’t let me set up a company in Italy,” he said.
All his businesses at home have been closed or confiscated, though he is appealing the seizure of his assets.
“I have always worked in my life. It’s true I married the daughter of [Totò Riina] but I have been tortured for it,” he told OCCRP.
“I looked into how to set up a company in the UK and Formations House came up. At that time it was amongst the first results on the internet.”
Riina’s business associate in T&T Corporation, Katia La Placa, was also targeted by Italian law enforcement for her mafia ties. In 2014, authorities confiscated her two villas – one on the southern island of Sicily, and the other in Lombardy, in northern Italy – and other assets worth some 11 million euros ($12 million).
Despite the Riina family’s legal troubles in Italy, which were widely reported in the press, Formations House was willing to help them set up Corleone Caffe with a proxy secretary and a UK business address in July 2015, while the T&T trial was ongoing.
In an interview, Maria Concetta Riina claimed that the firm had never actually operated. “We had in mind [to import and export coffee] and then events went against us and it ended up like this,” she told OCCRP’s partner IRPI.
Riina and La Placa were not the only Italians with mafia ties who turned to Formations House for help with their international business dealings.
Carrefur Ltd, Magnolia Fundaction Ltd, and Business Bank Italy were all registered at 29 Harley Street and listed Antonio Righi, also known as “Tonino The Blond,” as a director or shareholder. He was given a 16-year sentence in 2017 for money laundering and having ties to the Camorra, a Neapolitan organized crime group believed to have more than 50,000 members.
Prosecutors working undercover recorded Righi threatening a man to whom he had allegedly given mob money to make an investment, and discussing moving funds through Carrefur. He said on the tape: “We’ve come here to kill you tonight. Perhaps you don’t get it? At the same time, we’ll also kill your son and your wife.”
Formations House’s involvement with Business Bank Italy didn’t stop when it registered the company in 2008. The firm’s internal customer files, reviewed by journalists, contain detailed records of more than 30 separate sales of Business Bank Italy shares between 2010 and 2013, worth more than $18 million.
The company changed address in June 2016 and Pawar told journalists it is also no longer a client of Formations House.
During a debate on a new anti-money-laundering law in the UK parliament in 2018, MP Anneliese Dodds described Righi as a “Mafia kingpin” and asked why Business Bank Italy had been allowed to use “bank” in its name without authorization from the Financial Conduct Authority.
“I hope the Minister can indicate why that is and whether he will look into this matter, if he has not done so already.”
In response to a parliamentary question from another MP on the issue, Andrew Griffiths, who was then the Parliamentary Under-Secretary of State for Small Business, Consumers and Corporate Responsibility, said there was no statutory basis for shuttering Business Bank Italy, as there was no investigation into the company’s activities at the time.
Business Bank Italy was finally dissolved in August this year.
Michele Riccardi, a senior researcher on organized crime for the Milan-based research center Transcrime, said the UK has become one of the top destinations for Italian money launderers in the past 20 years.
“The mafias are experimenting abroad because now in Italy everything is confiscated and confiscated easily,” Riccardi said.