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A shell company is a company that exists only on paper. It has no physical office, no employees, and produces no goods or services. While this sounds suspicious, they can be used for both perfectly legal and highly illegal purposes. This section helps you explore the two sides of the coin.
For privacy, liability protection, or complex corporate structuring, shell companies can be useful tools:
The core problem is anonymity. When the true owner (the "Ultimate Beneficial Owner") is hidden, shell companies become the perfect vehicle for crime:
Creating a shell company is often surprisingly easy. The key is "layering"âcreating a complex, multi-national web of companies to make it almost impossible to trace the real owner. This section breaks down the typical process and shows where these companies are often registered.
Register a company in a "secrecy jurisdiction" (a tax haven) with lax laws.
Appoint "nominee directors" (lawyers or paid actors) to sign papers and hide the real owner.
Have this company be "owned" by another shell company in a *different* country.
Use the "legal" company papers to open a bank account in a major financial hub.
Use the account to buy assets (yachts, real estate, art) with illicit, now "clean," money.
This chart shows jurisdictions ranked by their "secrecy score," a measure of how much they help hide financial activities. Some, like Delaware and Wyoming, are right in the United States.
The anonymity provided by shell companies has a massive real-world impact. It drains public funds, fuels conflict, and enables crime on a global scale. This section highlights the scale of the problem and the types of crime it facilitates.
This chart breaks down the origins of the "dirty" money that needs to be laundered, based on global law enforcement estimates. Click on a segment to see its label.
Investigative journalists have exposed this hidden world through massive data leaks. The "Panama Papers" and "Pandora Papers" revealed how politicians, celebrities, and criminals use shell companies. Explore these two major investigations in the tabs below.
A leak of 11.5 million documents from the Panamanian law firm Mossack Fonseca. It exposed a global system that allowed the wealthy and powerful to hide their money. The leak implicated 12 national leaders, 140 politicians, and numerous billionaires, leading to the resignation of Iceland's Prime Minister and widespread public outrage and investigations.
An even larger leak of 11.9 million documents from 14 different offshore service providers. This investigation, involving over 600 journalists, exposed the hidden assets of 35 current and former world leaders, over 300 public officials, and many more billionaires and celebrities. It further highlighted the global scale of offshore tax evasion and wealth-hiding.
In response to the growing problem, governments and international bodies are pushing for transparency. The main goal is to end anonymous ownership. This section outlines the key solutions being implemented or proposed.
These are government databases that require companies to declare their *true*, human owner (the "Ultimate Beneficial Owner" or UBO). Some countries are making these registries public, so anyone can see who owns a company.
"Know Your Customer" (KYC) rules force banks, lawyers, and real estate agents to do their homework. They must verify the identity of their clients and report suspicious activity, making it harder to use them as go-betweens.
Since money moves across borders, countries must work together. This includes new treaties for automatically sharing tax information and cooperating on investigations to seize illicit assets hidden abroad.