SAN004 · Sanctions

Front Companies

A front company is an entity with little or no genuine economic substance, established to give a sanctioned interest a clean commercial face. It exists to transact — to hold accounts, sign contracts and move goods — while the real party stays hidden behind it.

The finding combines two things: the *absence of substance* (no employees, no premises, no web presence, dormancy, recent incorporation) and the *concealment of ownership* (a link to a designated party, opaque ownership, an offshore owner). A shell alone is not the finding; a shell fronting a concealed interest is.

Risk indicators

Substance

• No employees
• No physical premises
• No web presence
• Generic business description
• Recently incorporated
• Dormant

Ownership-Concealment

• Ownership linked to a designated party
• Opaque ownership
• Offshore owner

Jurisdiction

• Secrecy / low-transparency incorporation (e.g. Marshall Islands)

Counterparty

• Counterparties carrying sanctions exposure or adverse media

Investigation actions

1. Resolve the entity and its owner.
2. Count substance indicators and grade Shell Substance.
3. Assess ownership concealment (designated link, opacity, offshore owner).
4. Score jurisdiction exposure for the incorporation.
5. Score counterparty exposure.
6. Aggregate; escalate at or above the threshold.

Detection logic

1. Resolve the entity and its owner. 2. Count substance indicators and grade Shell Substance. 3. Assess ownership concealment (designated link, opacity, offshore owner). 4. Score jurisdiction exposure for the incorporation. 5. Score counterparty exposure. 6. Aggregate; escalate at or above the threshold.

Related typologies

Curated from fc-05-sanctions-exposure-analytics-toolkit/typologies/SAN004_Front_Companies.md