Shell Companies

  • Shelf company: A corporation without any activity, waiting to be sold as a ready-made company

  • Shell company: A corporation which at the time of incorporation has no significant assets or operations

They can be used for legitimate purposes (tax and estate planning, mergers and acquisitions) and also by money launderers. They can issue shares to natural or legal persons, and in registered or bearer form. Bearer shares mean that whoever physically holds the share certificate, owns the share. They can be created for a single purpose or to hold a single asset.

Shell companies convert cash proceeds of crime into alternative assets. The launderer can create the illusion of business activity by creating a fictitious but cash rich business (restaurant etc). Any criminally controlled company can offer the criminal employment in order to appear legitimate.

Shell companies can disguise ownership. Nominees can be used as owners, directors, shareholders. Criminals can avoid being linked to assets by registering these assets in the name of a company. The records can be held in offshore locations where the information is difficult to access by law enforcement. In many cases the beneficial ownership information, if collected, is not verified in any way.

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