Truth Behind Numbers

Is Shell Company Money Laundering on the Rise in the US?

Is Shell Company Money Laundering on the Rise in the US?

When money is obtained illicitly, it will be considered “dirty money”. An unlawful act, money laundering cases transpire around the world every year, resulting in social and political costs exceeding $500 billion. Although there are criminal and asset investigators out there who strive to put an end to the dirty money empire, this illegal activity still takes place through the use of offshore accounts, holding companies and shell company money laundering.

What is Shell Company Money Laundering?

A shell company or corporation is an anonymous company that will disguise its true identity so that it can act as a vehicle for business transactions, minus facing scrutiny from the public or law enforcement. Sometimes referred to as “phantom firms”, shell companies are non-trading firms that tend to raise money prior to operations beginning or before a takeover is attempted.

The only real proof of a shell company’s existence would be the forms that are filled out upon its creation. This is because no real business actually takes place – just holding of assets, opening of bank accounts and money laundering. Shell companies may also be opened as a way of avoiding taxes.

The Growth of Shell Company Money Laundering in the US

As of late, there has been a huge leak of offshore financial records, showing how celebrities, criminals and heads of state have been involved in crime and corruption through avoiding taxes and participating in harmful practices relating to shell company money laundering. The leak exposes over 214,000 offshore entities linked to people in 200+ countries and territories.

Various news organizations and the International Consortium of Investigative Journalists conducted a 365-day long investigation to gather the findings, which show how financial secrecy has been sold to sports stars, billionaires, celebrities, politicians, and even drug traffickers and fraudsters. Exposed files include those of offshore companies managed by Saudi Arabia’s king, Pakistan’s prime minister and Iceland’s prime minister, as well as blacklisted companies in the US.

How Shell Companies are Secretly Shaping the Real Estate Market

Following the leak discussed above, which includes data that goes as far back as 40 years, people are left to wonder if shell company money laundering is still growing. The truth is that money launderers, corrupt politicians and tax evaders have been (and still are) using anonymous companies to trade assets, open bank accounts and build property.

Approximately 58 percent of property purchases that took place in 2015’s final quarter were not made by named people but rather, by limited liability corporations. Although secretive, this investment proves stable when acquired through a trust, shell company or offshore company. This proves true for luxury real estate purchases in particular. While some people would consider it fraudulent activity, real estate agents would beg to differ, stating that wealthy buyers are simply “protecting their privacy” when making real estate purchases like this.


Call Veriti Consulting now to speak with a professional and trusted forensic accounting firm. Reach out and contact us today at (855) 232-4410.

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