The sector in brief
Company service providers, also called corporate service providers, help clients form companies, provide registered offices, act as directors or nominee shareholders and handle filings. They are often the first and sometimes the only professional to deal with a new company, which gives them an important role.
Companies are a normal part of business, but they can also be used to hold assets, move money and hide who is behind a transaction. Shell companies with no real activity, and chains of companies in several countries, are a well-known feature of laundering schemes. The provider who set them up may be the only party who can say who is really in control.
That is why supervisors place a high value on the checks a provider carries out at the start and the records it keeps. The aim is that anyone looking back should be able to trace a company to the real person who owns and controls it.
Where the risk sits
Shell companies
Companies with no real business that exist only to hold assets or move money can hide the origin and destination of funds.
Nominee directors and shareholders
Where a provider acts as a nominee, the real owner may appear nowhere in public records. The provider must know who they are and hold the information securely.
Layered cross-border structures
Companies owning companies in different jurisdictions make it difficult to see who is at the top.
Use of the provider's address and services
A registered office or mail address gives a company an appearance of substance it may not have.
Client onboarding at a distance
Many clients never visit. Remote onboarding makes it harder to verify identities and to see who is really giving instructions.
Sanctions and high-risk countries
Structures can be used to hide links to sanctioned people or places.
Who supervises you
Company service providers in the DIFC are supervised by the DFSA, those in Abu Dhabi Global Market by the ADGM Registration Authority, and corporate service providers onshore by the Ministry of Economy and Tourism. Check your licence, since some firms operate in more than one jurisdiction and each has its own supervisor.
The supervisor decides the detailed rules for your licence category, so always read its current guidance alongside this page.
What supervisors expect
- A named compliance officer with authority to refuse a client or to end a relationship.
- A business risk assessment that covers the types of company and client, the countries involved and the services provided.
- Identification and verification of the real owners and controllers of every client company, to the end of the ownership chain.
- Understanding of the purpose of each structure and of the source of the owners' wealth in proportion to the risk.
- Strict control over nominee arrangements, with written records of who the real owner is.
- Sanctions and politically exposed person screening, with documented review of matches and ongoing monitoring.
- Reporting through goAML, training, record keeping for the required period and independent testing.
Red flags to watch
- A client who wants a company with no clear business purpose.
- An owner who refuses to be identified or who uses a series of intermediaries.
- Requests for nominee arrangements that hide the real owner from the provider.
- A group with companies in several countries and no commercial reason.
- A company that is dormant for a long time and then handles large payments.
- Pressure to set up quickly and without full documents.
A worked example
Several companies at one address, one owner behind them
A client orders four companies in different countries, all to use the provider's registered address, with different nominee directors and different named owners who share a surname and a phone number. The client says it is a family arrangement but cannot explain what each company will do. The provider asks for a plan for each, a record of the real owner and the source of funds. If the client cannot provide it, the provider should decline, record the refusal and have the compliance officer consider a report.
How Adventant helps
Questions answered
What is a beneficial owner?
The natural person or persons who ultimately own or control a company, directly or indirectly. A provider must identify and verify them and take reasonable steps to confirm the result, rather than stopping at the first company in the chain.
Can we provide nominee directors?
Many providers do, but it carries serious risk. You must know who the real owner is, understand the purpose and keep records securely. Many firms limit or avoid the service.
Do we have to monitor after incorporation?
Yes. Ownership, activity and purpose can change, so you should review clients at a frequency set by risk and when something significant changes.
What if a client wants to use our address only?
Providing a registered office is a regulated service, and you must still know the client and the purpose. A company that uses your address with no real activity needs close attention.
Who decides whether to report?
The compliance officer, after review. Staff should escalate promptly and not tell the client that a report is being considered.