Clean Money, Long Route

01The situation

The capital was clean on the balance sheet. Its route was not.

A promoter had infused substantial share capital and unsecured loans into his listed company to support expansion. A lender and an investor wanted comfort on the source of those funds.

02How it worked

1. 01Funds entered the company as share application money and promoter-group loans.
2. 02They came through a chain of small private companies and partnerships, several sharing directors, addresses and auditors.
3. 03Those entities had little business but large inflows from unexplained sources.
4. 04Some of the same entities had earlier received payments from the listed company as advances.
5. 05The structure made the infusions look like fresh promoter capital.

03The challenge

Trace the infusions back through layers of entities using public and lawfully obtained information, and assess the regulatory and reputational exposure.

04Our approach

1. Workstream 01

   Corporate records analysis

   Directors, shareholders, charges and filings across the entity web.

2. Workstream 02

   Funds-route mapping

   Lawfully available financial information on the layers.

3. Workstream 03

   Regulatory and litigation screening

   Orders, proceedings and media on the group.

4. Workstream 04

   Discreet market intelligence

   The promoter's reputation and business dealings.

05What we found & did

• Infusions routed through dozens of entities with little business.
• Part of the 'fresh' capital was the company's own money coming back.
• Shared directors, addresses and auditors across the layers.

06The impact

07Lessons for your business

The controls that would have stopped this, or caught it sooner:

• Ask where promoter infusions come from, not just whether they arrived.
• Map entities that fund promoters for shared directors and addresses.
• Check whether the company has paid those entities before.
• Treat layered small entities as a red flag.