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Monday, February 11, 2013

Shell Companies

I'm not a businessman. I know next to nothing about illegal or legal business activities. Yet I find articles about studies like this one in the Deseret News fascinating, probably because I find the business world so mysterious. Here is the study:
The study entitled, “Global Shell Games: Testing Money Launderers’ and Terrorist Financiers’ Access to Shell Companies” found that nearly half of corporate service providers around the world do not collect legally required identification from customers seeking to form a shell company.
Tax havens like the Cayman Islands complied with international laws far better than many wealthy nations, the study found.
Shell companies have no assts [sic] or employees and are established to conduct transactions and have other legitimate uses. However, when when company owners are anonymous and untraceable to law enforcement they become potential vehicles for bribes, money laundering and financing of terrorism.
Here is how a shell company works to evade the law.
Such shell companies can be set up online in dozens of countries in days or even hours for as little as a few hundred dollars, he said. The companies that cannot be linked back to the real individuals in control can create near impossible obstacles for regulators and law enforcement officials to overcome, the report stated.
He said he biggest problem was in wealthy nations, including Canada, England and especially the United States. In the U.S., corporate law is handled by the states, he said.

And the findings? This is the part I find most fascinating.
Conversely, he said it would be very easy to get an untraceable shell company in Montana, Nevada, South Dakota and Wyoming.
“Easier than almost anywhere in the world,” Nielson said. The places that rivaled those states where the nations of Kenya and our neighbor to the “Great White North”, he said.
“Canada is very bad,” he said. “It’s easy to get an anonymous shell company in Canada.”
Nielson said having such lax laws makes those places much more susceptible to potential criminal activity.
“It makes them havens,” he said. “(Those states) make it easy to incorporate anonymously and therefore facilitate illicit movement of money.”
He noted that New York was “not much better.”  
No surprise to me about Nevada and New York, but I am a little surprised California and Illinois aren't on this list too! Those states, as poorly managed as they are, must be doing at least something right.

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