New Zealand Reserve Bank Gesticulates at Pseudobanks Run by Offshore Directors (and Registered by Offshore Company Agents)

What’s in a name? That which we call a rose
By any other name would smell as sweet;

William Shakespeare

In October 2009, the Reserve Bank of New Zealand can dimly sense that something is amiss, and makes this announcement:

The Reserve Bank advises that caution should be exercised by anyone considering doing any form of business with entities that promote themselves as “New Zealand offshore finance companies”, or use similar descriptions, and that offer financial services either on-line or from locations outside of New Zealand.

No such category of entity is recognised under New Zealand law. The entities involved are usually just registered in New Zealand as companies or limited partnerships, and they have no special status. These entities are not licensed or supervised as financial service providers by any New Zealand authority. They are required to register a New Zealand address, but this is usually that of a compliance agent, with the entities having no real physical presence in New Zealand. These entities are often directed or owned by persons who are not resident in New Zealand. Details about the directors and ownership of these entities can be obtained by searching the on-line database of the New Zealand Companies Office.

That warning obviously wasn’t enough. The Reserve Bank feels obliged to go over it all again, on 29 Mar 2011, spelling things out at more length. Just one sentence gives the game away:

Entities incorporated in New Zealand may provide financial services outside New Zealand without any form of licensing.

Oh, don’t tell the scammers and moneylaunders that, Reserve Bank of New Zealand. All they will do is start up a whole bunch of pseudobanks in New Zealand, with overseas directors, and rip off dopey foreigners over the internet, and launder money.

Relax, folks. The Reserve Bank wasn’t inadvertently giving the crooks a whole new angle to work with by making that disclosure; the crooks were at it already…

The Reserve Bank noticed that too, after another three months:

The use of certain words (called ‘restricted words’) by entities incorporated in New Zealand is restricted by the Reserve Bank of New Zealand Act 1989 (‘the Act’). The word ‘bancorp’ is a restricted word for the purposes of the Act. Restricted words may not be used as registered names, or names under which any activity is carried on.

It has come to our attention that the entities listed below appear to be carrying on business using the word ‘Bancorp’ inappropriately in their trading names. This is contrary to the provisions of the Act.

None of these entities are licensed or prudentially supervised by the Reserve Bank of New Zealand or any other New Zealand authority.

The bank gives a list of a dozen companies and their web sites. Given the pace of the Reserve Bank’s thinking, one has to guess that there really are more than a dozen companies. To get an idea, one might look for all NZ companies have now, or have ever had, “Bancorp” in their name. Here is the complete list, 136 companies, of which 67 companies have not yet been struck off. Some are real banks: for instance the Bancorp companies at 191 Queen Street are these guys.

But even after filtering out the real-looking banks, there remains a dauntingly large balance of multifarious, blogger-defeating dubiousness. One is obliged to tackle the low-hanging fruit, and leave another 80-or-so ex-Bancorps for another time.

The low-hanging fruit is the work of Auckland Compliance Limited, subject of a forthcoming post, who have registered at least 39 companies that once had “Bancorp” in their names, 19 of which have been struck off.

Five of those struck-off companies have traceable web info. They all look like scams. None rated a public warning from the Reserve Bank, but one knows the Bank is active behind the scenes, so perhaps they spotted these ones too, and just quietly had them clobbered.

Current name	Remarks
IFB FINANCIAL SERVICES LIMITED	Struck off the New Zealand register on 8th June 2011: but the web site still appears to be active, and has links to another site which looks like an advance fee scam; see for instance the verbiage here
GLOBAL EUROPEAN FINANCE LIMITED	Judging by the Wayback Machine, this was a short lived scam.
2267685 LIMITED	Hotfroggives a Turks and Caicos phone number: +649 353 1551The Wayback Machine redirects from http://firstbancorplimited.com/ to http://www.fblimited.com, which is ‘suspended’
ASIA PACIFIC SAVINGS AND LOAN LIMITED	No web site, but the “acting president”’s LinkedIn page is here http://www.linkedin.com/in/cfofirstpacificbancorpltd and states, re Asia Pacific Savings And Loan Limited: “Our company is a New Zealand registered company authorized as a quasi banking operations, accepts cash deposits and bank instruments as collateral to secure project funding and will provide brokered CD for balance sheet enhancement. Please see our websites for the complete details of our operations.” The LinkedIn page also claims that this fellow was Vice President, Finance at First Pacific Bancorp Limited between March 2000 and March 2009. First Pacific Bancorp Limited was registered in 2007.
2320293 LIMITED	http://web.archive.org/web/20100526040442/http://www.central-bancorp.com/en/index.php?p=1 The site has gone: many indications that it was a scam.

 

Of the 19 still registered in New Zealand, a few appear to be dormant. Six have traceable web sites, and either look like scams, or are already attracting attention from regulators somewhere in the world; these have gone unnoticed by the Reserve Bank:

Current name	Observations
CENTURY SAVINGS AND TRUST LIMITED	Its site looks like an advance fee scam, in fractured English
FLAMEL TRADING LIMITED	The site is slick but there’s an alert by the Panama regulator
ATLANTIC SAVINGS AND TRUST LIMITED	Its online disclaimers are nonsense and it has a dissatisfied Spanish-speaking customerwith some leads: ANALIX tiene la misma dirección que CYGNUS ONE, Ambos trabajan con Atlantic Saving & Trust ( antes ATLANTIC TRUST & BANCORP LIMITED), ven como cambian de nombre como si cambiaran de calzones…la idea es ROBAR! NO INVIERTAN AHI, NO SON EMPRESAS NO REGULADAS
2076102 LIMITED	Its web site makes it look like another advance fee scam
2121682 LIMITED	Its web site has far too much fractured English not to be a scam.
WORLDWIDE FORSTOCK LIMITED	Its web site still has traces of its old NZRB-offending pitch and meantime it is the subject of official warnings in Austria, Belgium, Denmark (creaky web site) and Sweden

 

Apart from one company that the RBNZ half-spots, of which more later, we are now down to just three companies, out of the 39 registered, that aren’t dormant, defunct, scams, or already subject to some regulatory warning: AMENA Capital Limited, MERCXYZ ONE Limited and WPBC Limited

Amena Capital’s web site gives the initial impression of being a little more professional than some of the other junk I’ve showed you today. However its take on its own regulatory situation is just as wrong as that of other institutions snarled at by the Reserve Bank of New Zealand:

AMENA Capital Limited is incorporated in New Zealand and is a registered financial institution authorized to conduct the business of banking and financial services. The head office of AMENA Capital Ltd is in Hong Kong. AMENA Capital Limited is a subsidiary of AMENA Group Ltd.

Financial institutions registered in New Zealand have FSP numbers. Amena Capital doesn’t say what theirs is, and when you query the FSP register for their name, you come up empty handed.

I also can’t help noticing that despite its sprawl of web sites, Amena hasn’t left any traces in the online financial media. That’s despite claiming to be a REIT sponsor, and despite purported activity in the IPO market. That is exceedingly fishy, and it could mean that Amena is just another advance fee scam. I trust the Reserve Bank will soon be on the case.

That brings us to our last two entities, MERCXYZ ONE Limited and WPBC Limited. I must say that if they are legit, they made a very rum choice of business structure and service provider. Via a circuitous route, which I hope I have traced correctly, WPBC Limited turns out to be this rather swish Australian outfit.

So if I’m right about that, both these companies are opaque offshore online providers of prepaid payment cards. Which just shouts “money laundering”, and not just to me: here are a recent warning and a much earlier one.

That’s 12 very likely frauds, plus other dubious entities, out of 39 companies, in this sample of former Bancorps registered by Auckland Compliance. Impressive, but not in a good way.

Let’s tackle the one bank in this group that Reserve Bank does spot, Metropolitan Financial Holdings. The Bank warns

This company is not licensed or prudentially supervised by the Reserve Bank of New Zealand or any other New Zealand authority. It is not registered as an “Offshore Financial Corporation” as claimed on its website – no such type of entity is recognised under New Zealand law. The company does not have any physical presence in New Zealand.

Refer to the caution on this website page about “New Zealand offshore finance companies”.

But this announcement now features on the Reserve Bank’s list of expired notices. Was this revised (and slightly grumpy, and still misleading) blurb on the Metropolitan Financial web site…

In order to meet the compliance measures of the new laws of New Zealand, Metropolitan Bancorp LTD name has been legally changed to Metropolitan Financial Holdings LTD. Metropolitan Financial Holdings is offering financial services as a finance company (a regular registered company) not as a registered bank. Metropolitan Financial Holdings is not a registered bank, nor it is supervised by the Reserve Bank of New Zealand for any purpose.

…enough to placate the Reserve Bank?

It’s an intriguing judgement by the bank. Here you have an offshore bank, with no physical presence in its country of registration, with an opaque company registration to boot, performed via an overseas agent whose track record suggests that it is nearly as good at registering frauds as it is at registering genuine companies…but as long as a bank with this pedigree doesn’t currently have a name that includes one of the Reserve Bank’s magic words, there’s nothing wrong with it.

I am puzzled. Section 4, the relevant piece of the Reserve Bank Act is pretty clear: the restricted words are “bank, banker, and banking”. Yet Metropolitan Financial Holdings has the Reserve Bank rearing up when they use the word “Bancorp”, and subsiding again, when they drop it. And here we have a spokeswoman for the bank announcing that it is prepared to interpret its mandate even more elastically:

“We take action against entities that appear to be breaching the Reserve Bank of New Zealand Act. The possible offenses under the RBNZ Act in respect of these entities are limited to (a) carrying on an activity using a name that includes the word ‘bank’ and its derivatives, (b) implying they are a New Zealand registered bank, and (c) using ‘bank’ words in advertising without a statement that they are not a registered bank.”

“We have successfully achieved the removal from the company register (with the cooperation of the Companies Office) of a significant number of entities that were using illegal names, and the removal of a significant number of websites that breached the RBNZ Act,” said the spokeswoman.

Well, although removing companies that use illegal names sounds like the right measure, at least until the crooks work out better ways to hide their traces, I can’t actually find anything in Section 4 that gives the RBNZ the power to do that. And a bit of latitude is certainly needed: the crooks will dodge. I don’t see that latitude in the current Act, but I suppose I’ll just take the spokeswoman’s word for it, for the moment.

The RBNZ isn’t exercising this power very consistently, either: witness not just Metropolitan Financial, but Worldwide Forstock.

Worldwide Forstock had a similar strategy for handling the Reserve Bank: change the company name, and add some verbiage to the web site about not being regulated by the Reserve Bank of New Zealand. When they changed their name, they hung on to the old URL; it simply redirects to the Worldwide Forstock site. That saves explaining the name change to their clients, I suppose.

The RBNZ has stayed off Worldwide Forstock’s case.

Meanwhile, the Slovenian authorities are warning about Worldwide Forstock; plenty of folk have got the memo, for instance Austria, Belgium, Denmark (creaky web site) and Sweden. Just…not the Reserve Bank of New Zealand, so far.

I suppose the Slovenians didn’t look that far afield for the source of the trouble. Nor would the Reserve Bank of New Zealand necessarily be broadcasting to the world that, if a foreign regulator wants to track down a dodgy financial company, New Zealand’s a great place to try.

The point is: it’s the contrast between what these fake entitities say they are doing, and what they are really doing, that should be a trigger for action, and what they call themselves can sometimes be a big fat clue.

So what’s in a name? Soon we will provide more demonstrations that, some of the time, names matter more than Juliet thinks. One of the names that matters is Auckland Compliance.