However, while this has made international transacting and commerce easier, it has had the unintended effect of facilitating criminal activities. Today, criminal organizations rely on the financial system to move large sums of money from illicit enterprises and make them seem legitimate – a practice known as money laundering.

Money laundering is a crime, along with many of the illicit activities through which the laundered money is realized. Yet, illicit financial flows continue to be a problem for countries around the world. How exactly does money laundering occur and why does it persist? Here’s all you should know about money laundering.

What is Money Laundering?

According to the Central Bank of Trinidad and Tobago (CBTT) Guideline on Money Laundering and Combatting of Terrorism Financing, “Money laundering is the process used by criminals to conceal the illegal origin and ownership of funds derived from criminal activities.” It includes all the schemes and tactics through which illegal money is moved, concealed, disguised and transformed in order to make it look like it was earned from legal sources.

Usually, this money comes from a variety of illegal activities such as human trafficking, tax evasion, drug trade and other illegal enterprises. In many other cases, the money is meant for financing terrorist activities and is being laundered in order to enable the money to reach the terrorists it is meant for.

Money can be laundered in various ways, including by putting it through the financial system, the use of pyramid schemes, investing it into real estate or even by purchasing stocks, bonds, and other securities. In some cases, criminal masterminds may play on the emotions of the unbanked and underbanked persons to launder money in schemes which appear legit at first glance. The overall goal of money laundering is to make illegal money appear legitimate so it can be enjoyed by criminal offenders or used to facilitate the laundering of other illegal sums of money.

The term ‘money laundering’ itself literally means washing or ‘cleaning’ money. The term is reported to have been coined by agents who were tasked with investigating notorious gangster, Al Capone. The investigation discovered Al Capone had been funneling the proceeds of his criminal empire through a chain of laundromats he owned at the time – a money laundering operation in every sense.

Although there is no concrete data on the exact amount of money laundered globally every year, estimates are that the figures run into trillions of dollars. According to the Financial Action Task Force on Money Laundering (FATF), the sum laundered around the world annually is roughly $1.5 trillion. The United Nations Office on Drugs and Crime similarly reports that between $800 million to $2 trillion is laundered every year – roughly between 2% and 5% of global GDP. For local context, the Financial Intelligence Unit for the period April to June 2020 reported a total of $2.7 billion (TTD) in suspicious transactions/ activity received via filing of Suspicious Transaction Reports and Suspicious Activity Reports from supervised entities.

Examples of Money Laundering

There are several ways through which money laundering is carried out. Often, criminal organizations and individuals prefer to adopt a mix of strategies that include property and business investments, as well as creative accounting.

Some of the most common examples of money laundering include casino schemes, smurfing and cash or front business schemes. Let’s look at some of these examples below:

• Casino schemes: Casinos are one of the largest repositories of money locally. Pre Covid-19 every day, thousands of people spend millions of dollars in casinos and many people are able to remove sums equal to this from the system. This makes casinos perfect for criminal organizations that want to launder large sums of money. The scheme works by injecting large sums into the casino by purchasing betting chips (usually in cash) and betting these chips only partially. The sums are then cashed out as legitimate casino winnings to be utilized as desired.
  
  
• Cash business: Money laundering schemes that use cash businesses as a front are one of the most common. The scheme starts by placing large sums of cash with a legitimate business. These cash sums will then be injected into the business’ accounting in the form of fake transactions, which are then mixed in with usual business conducted during the day. At the end of the process, the injected cash will be reported as part of the company’s profit, and can then be adapted to any purpose.
  
   
• Smurfing: Smurfing, also called structuring, is another popular practice designed to integrate illicit wealth into the financial system. The scheme works by placing small amounts of cash into multiple bank accounts over a period of time until all the illegal money has been placed. Usually, banks have obligations to report transactions that exceed a certain threshold. However, through smurfing, criminals can avoid triggering this reporting obligation by making multiple deposits that stay beneath the threshold. Many smurfing operations are very sophisticated and they include strategies to vary the deposit amounts in order to beat any automatic detection mechanisms.
  
  
• Foreign investment: This scheme can be very hard to discover and beat. Foreign investment schemes launder illegal money by disguising it as legitimate investment in a country by a foreign investor. Usually, the money is transferred to a third party that has no apparent connections to the illegal activity or individuals that made the money. The third party then ‘invests’ the money in a business of the criminals’ choosing. The money can later be taken out in the form of dividends, high executive salaries and other measures.
  
  
  

Why Do People Launder Money?

There are countless reasons why people may choose to launder money. Despite the fact that the act is an offense and often involves money from illegal enterprises, a lot of money still gets laundered.

A primary purpose for doing this is to be able to enjoy the illegal wealth criminal organizations and individuals have amassed. Ordinarily, it can be difficult to make and spend money from illegal conduct. Most criminal organizations prefer to make criminal transactions in cash, since it is generally untraceable. But this money accumulates, and soon, it becomes inconvenient to have it all in cash. So, money laundering is considered an option to protect the money and utilize it.

Certain other organizations and individuals launder money in order to finance illegal activity. For instance, countries and organizations that fund terrorist organizations typically do not want any ties between them and the terrorists they fund. In situations where a cash handover is not possible, it is beneficial to provide this funding through a complicated maze of financial transactions which usually involve the use of charities and non-profit organisations that does not lead back to them.

As a result, money laundering is almost exclusively a tool utilized by people who want to hide the source of their money or the ends they wish to put it to.

3 Stages of Money Laundering

As mentioned already, there are several different ways in which money laundering schemes are carried out. Apart from the examples listed above, there are thousands more ways in which criminal organizations move and protect their illicit wealth.

However, there are certain typical elements that underlie all money laundering schemes. These are commonly referred to as the “stages” of money laundering which must be achieved in order to clean the “dirty” money. They are as follows:

• Placement: This is the first stage of the money laundering process. At this stage, illegal money is first introduced into the financial system without arising great suspicion. For instance, the money may be deposited in a bank at this stage, introduced into a casino by purchasing betting chips or injected into a cash business.
  
  
• Layering: The second stage is where the illegal money is blended with legitimate money in order to confuse the money trail. Layering often involves complex financial, accounting or strategic tactics that are designed to thoroughly disguise the placed funds. The trail can become so confusing that even skilled accountants and forensic experts may lose sight of the funds. Examples of layering include transferring deposited funds across a complicated network of accounts, creation of fictitious loans, and payment on false invoices.
  
  
• Integration: Once the money is thoroughly cleaned during the layering process, it is then integrated into the financial system as legitimate money. At this stage, you may see the money being received as fair dividends on stocks, shares and bonds, or executive compensation from legitimate businesses. As a final step, the money may be fixed in short to long-term investments such as real estate, and several other investment vehicles.
  
  
  

Consequences of Money Laundering

While money laundering may seem like something that affects only the people involved in doing it, the reality is that it has far reaching effects. One of the immediate consequences of money laundering is that it helps to finance further organized crime in society.

It allows criminal organizations the facilities they require to use their illegal wealth, giving them the resources to expand their operations. In addition, it fosters the dangerous narrative that crime pays as it removes barriers to gaining and enjoying wealth from criminality.

For developing economies, money laundering can be especially devastating. It erodes local and international confidence in the financial system, and in the same manner, it can result in both de-risking and capital flight. De-risking in this context refers to foreign financial institutions terminating their business relationships with local banking institutions. This creates the loss of correspondent banking relationships which are critical for access to global payments and financial systems.

It is for these reasons above that the fight against money laundering is receiving attention from the authorities. Locally, the oversight of money laundering falls under the purview of several organisations mainly the Financial Intelligence Unit of Trinidad and Tobago, the Central Bank of Trinidad and Tobago, and the Trinidad and Tobago Securities Exchange Commission. These agencies are supported by Law Enforcement Agencies such as:

• Financial Investigations Bureau of the Trinidad and Tobago Police Service
• Criminal Tax Investigations Unit of the Inland Revenue Division
• Financial Investigations Unit of the Customs and Excise Division
  
  
  

How do we reduce Money Laundering?

Money laundering has the potential to pose a serious threat to the overall functioning of our local financial system. As such, various industries (such as banks, insurance companies, investment brokers and advisers, credit unions, casinos, real estate brokers and agents, attorneys, accountants, jewellers, and motor vehicle sales businesses) are regulated by the various supervisory authorities.  This regulation involves the adoption of anti-money laundering measures to identify the risks associated with money laundering and to implement measures to mitigate against these risks.

At FirstLink Business Solutions Limited, we provide a full-service anti-money laundering (AML) compliance solution which seeks to understand and manage supervised entities AML/CFT risks, develop comprehensive compliance programs in accordance with their risk appetite and better detect and report instances of money laundering and terrorist financing. If your business is regulated by any one of the Supervisory Authorities above, Schedule a Free Consultation with one of our Certified Anti-Money Laundering and Financial Crimes experts today.

Think about it. How much coding does Mark Zuckerberg actually do? What did Arthur Lok Jack really know about chocolate and food manufacturing before he bought Charles Candy and turned it into the regional giant that is Associated Brands? Both these men have built billion-dollar companies, but they didn’t do it alone.

And you know another thing that you’ll find common with all these businesses? They all rely on the services of qualified legal professionals to keep their business out of trouble or get it out when trouble comes calling.

As a small business owner, you should recognize that the business environment is rife with risks. And just as you would need an accountant to help manage your financial risk, you need a corporate lawyer to help combat and minimize your legal risk.

If you have been in business for many years and are still wondering if you really need a corporate lawyer, you may have exposed your business to serious legal risk already. If your business is still new, then you may be just in time. Here are 8 reasons why you need to contact a corporate lawyer pronto.

#1: Advice on business structure

All businesses must operate within a structure. This is because, at its most fundamental, the law relates to businesses on the basis of their structure. For instance, company tax laws cannot apply to you if you run a sole trader. But once you establish an LLC, no matter how small, these laws apply.

For businesses that fail to seek relevant advice regarding the appropriate legal structure for them, serious problems can ensue. Apart from this, you may lose out on several legal benefits of using one structure over the others.

#2: Draft and review legal documents

As a business owner, you will be involved in the creation of numerous legal documents. These could range from notices on obligations expected from you by the authorities to documents of lease relating to property.

They could also involve infinitely more important documents such as your company’s articles of incorporation, by laws, or your founder’s/shareholder’s agreement, which form the backbone of your business.

All of these documents will include provisions that should be dissected and properly explained to you in order to protect your business’ interest. A corporate lawyer will be vital to ensuring that you are not cheated on these documents and provide assistance with drafting favourable documents when the need arises.

#3: Provide advice on crucial business contracts

How many times have you begun negotiations with a supply partner or someone else and saw terms or provisions you didn’t understand? If this has happened to you frequently, you’re already courting trouble.

It is incredibly dangerous to enter into agreements which you don’t understand or the ramifications of which are not clear to you. Having a corporate lawyer on your end of the table ensures that you can tell exactly what is on the table and what you need to do to make it more favourable.

#4: Perform due diligence

Due diligence refers to measures that a diligent buyer or seller should take before entering into a binding agreement. It especially relates to the sale of land, a stake in a business, strategic partnerships and joint ventures etc.

The need for due diligence arises from a legal rule: “caveat emptor” or buyer beware. Basically, it means that if you enter into a binding agreement without finding out facts you could have if you had taken the trouble to, you will remain bound by the agreement.

So, if you sold a stake in your business to a buyer and thereafter discover that they’re going bankrupt, you may have sold your business for peanuts. And you will be bound by the agreement. But by involving a corporate lawyer from the start, they could help you investigate the buyer thoroughly, so you are certain they have the capacity to buy.

#5: Keep an eye on regulatory changes

Even when a corporate lawyer is not actively providing advice on your day-to-day business activities, they are vital for keeping updated about regulatory changes and how they affect your business.

There are two advantages here. First, you can get a broader spectrum of updates from a corporate lawyer than you would get on the news, Facebook or some other subscription. Second, along with the updates from your lawyer, you can get detailed advice on how the changes affect you and what you should do about it.

One of the common reasons for business failure, as found by CB Insights, is an inability to keep up with regulatory changes. Did you know the Companies Act was amended in 2019 to include the issue of share issuance and beneficial ownership? No… Well your Corporate Lawyer could have kept you abreast. Don’t let your business be taken by surprise. Retain a corporate lawyer for timely notification and advice.

#6: Counselling on employment-related issues

If you have even a single employee, then this is advice you should not be missing out on. Most labour and employment laws apply whether you have one employee or hundreds. Do you adhere to requirements such as minimum wages, maternity, sick leave, holiday entitlements etc?

All of these laws impose specific obligations on employers and will require active integration into your business processes. If you don’t do what is expected of you, your business will be open to legal liability. And as far as the law is concerned, ignorance of the law is not an excuse.

A corporate lawyer will explain all the laws that should apply to your business, based on your industry and legal structure. They will also advise you on how to comply with them.

#7: Legal support to your accountants

No matter how good your accountant is, they will always benefit from the involvement of a good corporate lawyer. That’s why at FirstLink we provide businesses with a comprehensive range of finance, legal and HR solutions. While your accountant’s responsibility is to arrange your financial affairs in line with best practices and legal rules, your lawyer will be vital to explaining the legality of your financial practices.

Perhaps most importantly, they will be very vital to explaining how those practices have been perceived and interpreted in the courts and what it means for you. So, if you are thinking about trying out a tax avoidance move, you should obtain specialist advice on its legality or otherwise.

#8: Elude or fight legal challenges

Although a corporate lawyer’s main brief is to keep your business out of trouble, there’s no better partner you’ll want if trouble comes anyway. Your corporate lawyer will be vital to assessing the level of legal threat and what steps can be taken to diffuse the situation.

And if all else fails, they will be able to either fight aggressively on your behalf whether that is via mediation, arbitration or litigation.

Conclusion

Although you may look on the services of a corporate lawyer as a luxury that your business may be unable to afford, your view may be wrong. Rather, not having a corporate lawyer on your side may be the most dangerous luxury that you can ill afford.

To ensure that your business gets on and remains on the right legal path, do your best to retain a sound corporate lawyer. It may not be as costly as you may think. At FirstLink, we offer several packages to suit the budgets of startups and small to medium businesses.

We also offer a Legal Health Check solution which is a cost-effective way to determine what risks your business may be exposed to. If you would like to discuss the various risks your business may be exposed to and remedies to solve them, schedule a free consultation today to learn more about how our services can protect your startup or small or medium business.

This article seeks to provide a step-by-step guide for registering or incorporating a limited liability company at Registrar General in Trinidad and Tobago.

Where Do I Register a Company?

The registration of companies is done by the Companies Registry which is a division of the Registrar General Department of the Ministry of Attorney General and Legal Affairs. There are four locations within Trinidad and Tobago. We have included below the addresses and contact numbers for each location. They are:

North (Head Office)

AGLA Tower, Government Plaza
Corner of London and Richmond Streets, Port of Spain
Telephone: (868) 625-9971

East

Pennywise Building, 2nd Floor
10-10A Devenish Street, Arima
Telephone: (868) 667-1700

South

#9 Leotaud Street, San Fernando
Telephone: (868) 653-4858

Tobago

Caroline Building No. 2
#11 Hamilton Street, Scarborough
Telephone: (868) 639-3210

Who Can Register a Company?

According to Section 8 of the Companies Act, Chap. 81:01, any one or more incorporators may form a company providing that these incorporators ARE NOT:

• less than 18 years old;
• mentally ill within the meaning of the Mental Health Act, and
• is an undischarged bankrupt having been adjudged or otherwise declared bankrupt under any law in force in Trinidad and Tobago or elsewhere.

Now hold on… Some of you who previously register companies may be thinking “what is an incorporator and how come I didn’t need to get one of those to register my company?” But don’t worry let us add some further clarification.

Firstly, if you ever registered a limited liability company there was an incorporator. An incorporator is simply a person or business entity that prepares, signs and files the articles of incorporation to Registrar General for the purpose of registering a company.

It is important to note that the Companies Act makes provisions for the incorporator to be listed a member (shareholder) in the company unless the right is waived by the incorporator.

Furthermore, there are additional requirements for incorporators who are foreign investors. Section 4 of the Foreign Investment Act, Chap. 70:07 requires a foreign investor to notify the Minister of certain requirements in writing prior to proceeding with an application to incorporate a company at Registrar General.

Which Forms Do I Need and How Much Does It Cost?

Step One – Conduct a Preliminary Online Name Search

The Business Names Act prohibits the registration of similar or identical names. Ideally, an individual is required to conduct an online name search to ensure that their company name is not already taken. Searches can be conducted using the following Online Name Search link.

Step Two – Conduct a Business Name Reservation

Fill out the Application for Name Search and Name Reservation – Form 25 and submit it to the Companies Registry. There is a processing fee of $25. A decision on whether the name was approved or rejected will be communicated within 3 working days.

Step Three – Incorporate Your Company

Once the name search has been successfully approved, the incorporator is required to fill out and submit the following documents along with the prescribed processing fee:

• Articles of Incorporation – Form 1 $400
• Notice of Directors $40
• Notice of Address $40

In addition to the above fees, an additional sum of $40 is charged for the issuance of the Certificate of Incorporation which is payable upon submission of the above documents. An official Certificate of Incorporation will be available for collection within 3 working days provided all documents are in order.

And that’s it! You’re now a proud director of a limited liability company. But hold on this doesn’t mean that you can file those registration documents away in some folder and forget about them. As a director of a limited liability company, there are post registration legal requirements under the Companies Act which you must adhere to.

Did You Do It Right?

Finally, many persons usually ask us did they even do the process right (i.e. were the forms completed correctly). We have only provided a basic overview of the steps required to register a company at Registrar General. There are, however, many questions which must be answered throughout the registration process.

These may include determining what classes of shares will exist and its restrictions (if any), variation of pre-emptive rights, and the power of the directors to make, amend, or repeal changes to the byelaws. We always advise that individuals consult with a competent accountant or attorney to gain guidance on any subject matter which they are unclear about.

Conclusion

At FirstLink, we recognize that no two business ventures are the same. As such, the advice rendered to any client varies based on the size, nature, and complexity of the business.

We pride ourselves on our modern but old-fashion approach to business. We sit with our clients whether physically or via web conferencing to determine the context of their unique business situation before we provide any recommendations.

If you require any assistance with regards to registering a limited liability company, the terms contained within the articles of incorporation or any of the post registration legal requirements of a company, request your free consultation today to speak to one of our advisors.