frontbedrijf

Frontbedrijf is a term used in Dutch and Belgian contexts to describe a commercial entity that exists primarily to conceal the true ownership, source of funds, or the real nature of activities. It provides a veneer of legitimacy to illicit operations and can be used to present an image of normal business activity while hiding connections to criminal enterprises or unlawful finance. Frontbedrijven may be involved across various sectors, from hospitality to construction and import/export.

Typical features include a registered address that appears ordinary, routine invoicing or billing practices, and limited actual business activity; ownership is frequently held by another company or private individuals who stay out of the public eye; the arrangement may involve shell entities or nominee directors used to obscure control.

Frontbedrijven are used to hide the true source of funds, facilitate money laundering, or disguise ownership to evade taxes, sanctions, or regulatory requirements. They can also be used to lend legitimacy to illicit activities by creating a plausible business front, such as a consultancy or trading company, that is effectively a facade. This makes enforcement and financial due diligence more difficult for authorities, banks, and regulators.

Regulatory responses include mandatory due diligence for financial institutions, checks on beneficial ownership, and reporting obligations under anti-money laundering laws. Some jurisdictions maintain registries of beneficial ownership to reduce anonymity. When detected, authorities may investigate, seize assets, and prosecute those responsible, and licenses may be revoked.