Government-controlled corporations located in developing countries where corruption is rampant represent a major threat to those Western banks where it maintains accounts. Such companies often conceal the fact that their are dominated by, or controlled by, the leaders of the country where they are located, and for good reason:

• Some of these firms receive "arranged" financing, loans made by commercial banks under pressure and coercion from their national government. Many of these loans will never be repaid, due to the strength and power of the government officials who coerce bankers to fund them. The legal systems of such countries, unduly influenced by their government, rarely apply the rule of law to enable the banks involved to recover the loans.
• Some funds are boldly diverted from the public treasury, and transferred to government-owned or controlled companies, by senior PEPs in the government. There may even be fraudulent invoices or fictitious business arrangements created to mask the crime, 
• Even illicit funds, the actual proceeds of crime, may find themselves laundered through being deposited in the accounts of government-controlled companies, and later declared as legitimate profit.

Of course, the officers, directors and managers of these companies generally have access to corporate funds, and may choose to hide some of the liquid assets in personal accounts, under specific orders of their government officials seeking to secrete cash overseas.

Corrupt senior PEPs with authority over government finances may seek to deposit funds in corporate accounts for personal use in the event that their regime is overthrown, and they must flee into exile. Who are the signatories?

It is critical to identify a company as a government-controlled corporation when it opens new accounts. some red flags that one should look for:

• Officers and directors never come into the bank, but only send low-level functionaries, or their attorneys, and may not want statements mailed back home. 
• Google or other Internet searches turn up the senior officers and directors as military, or government officials on active duty.
• The company appears to have a monopoly in its industry in the home country, without any valid business reason.
• The large balances appear to be inconsistent with the level of business that the company is conducting at home.

Remember, though government-controlled companies can be monitored to minimise the possibility that they are moving public funds out of the country, regular on-site inspections in its home headquarters, and daily traffic reports to senior bank management may be necessary for adequate risk management purposes. Don't get caught with millions of dollars in "flight capital" in your institution.