In Depth: Inside the U.K.’s China-Linked Shell Company Factory

1. More than 11,000 companies, which appeared as “British” on paper but were primarily linked to China, were incorporated or administered by three corporate secretarial firms—Yunma Tianlong International Consulting Co. Ltd., Busy Secretary Service Ltd., and J&C Business (UK) Co. Ltd. These firms were later ordered into compulsory liquidation by the UK High Court on January 29, 2024, for failing to conduct proper anti-money laundering checks and for mass-registering sham companies lacking real business activities in the UK [para. 1][para. 2].

2. Over half of these companies have been subject to enforcement action with ongoing investigations, according to the UK Insolvency Service [para. 3].

3. Companies registered through this network were implicated in a variety of cross-border crimes, including e-commerce-related tax evasion, cryptocurrency fraud, and “pig butchering” scams stretching across China and Cambodia, as well as a large-scale money laundering case in Singapore [para. 4].

4. Investigators highlighted a single address in London’s Docklands where over 9,000 companies were registered to a tiny unit, with piles of uncollected post, including official documents such as tax demands, exemplifying the massive scale and lack of substantive presence of the operations [para. 5].

5. The three secretarial firms mainly served Chinese clients, effectively operating as a “shell company factory” by providing company secretary and registration services, exploiting UK regulations which, until recently, made company establishment extremely easy with only a correspondence address and basic details needed, and little scrutiny from Companies House [para. 6][para. 7][para. 8][para. 9].

6. The lax system allowed for quick incorporation regardless of operational legitimacy. Consumer complaints about cross-border e-commerce businesses triggered official scrutiny, as in the case of FunnyFuzzy UK, which was registered as British but fulfilled orders from China and inaccurately declared dormancy while processing £2.58 million ($3.5 million), avoiding VAT registration [para. 10][para. 11][para. 12].

7. Other companies, including Hario Trading and Sayhi International, presented themselves as UK-based fashion retailers but actually operated from Shanghai and also applied Yunma Tianlong’s services [para. 13].

8. In November 2024, the High Court ordered the compulsory liquidation of these three retailers for reasons of public interest [para. 14].

9. Zhang Liwen, a Chinese national born in 1990, was listed as the ultimate controller of Yunma Tianlong, though authorities have made no allegations of wrongdoing publicly against Zhang, and noted that in such arrangements, official controllers are sometimes merely “straw men.” Liquidators are to submit confidential reports on director conduct, after which disqualification or prosecution may be considered [para. 15][para. 16].

10. Companies associated with Yunma Tianlong have been linked to transnational criminal investigations, including the $2.3 billion money laundering probe in Singapore in 2023. U.K.-registered entities facilitated movement and concealment of assets between Hong Kong, Singapore, and Britain, and also appeared on regulatory watchlists for unlicensed financial activities in Hong Kong and New Zealand [para. 17][para. 18][para. 19].

11. The business model exploited the UK’s lenient corporate formation rules: create a British entity, move funds quickly before detection, and dissolve the company to hinder enforcement [para. 20].

12. The court’s action against the three firms has catalyzed greater scrutiny of the UK’s historically weak corporate registration and enforcement regime, which relied on self-reported data and minimal checks despite having 5.45 million companies for under 70 million people [para. 21][para. 22][para. 23].

13. Regulatory loopholes compounded when UK tax policies since 2021 incentivized overseas merchants to register as UK companies to avoid automatic VAT deductions, allowing some to evade taxes before dissolving [para. 24][para. 25].

14. The 2023 Economic Crime and Corporate Transparency Act imposed significant reforms, with stricter office requirements from 2024 and mandatory ID verification for directors by 2025. By mid-2025, Companies House had reviewed over 100,000 suspicious filings, rejecting over 10,000 [para. 26][para. 27].

15. Despite reforms, unregulated shell company services promoting UK incorporation for Chinese firms remain widespread online. Legal experts caution that underlying enterprises, especially Chinese, risk investigation and penalties for abuse of UK entities [para. 28][para. 29].