TRADECRAFT 101 PART ELEVEN: MONEY LAUNDERING THROUGH SHELL AND SHELF CORPORATIONS

The purpose this series is to take compliance officers inside the perspective of the practising money launderer, how he operates and what tradecraft he customarily employs to succeed in his illicit operations. Laundrymen take full advantage of what I have often referred to as a "Window of Opportunity," meaning the period between the date you obtain a corporation,and the date in which you must make some sort of filing. That gap period is when you shine; you use & abuse the company, working your laundering skills, and then abruptly abandon the company before you must report any names and addresses of officers and directors to the local Secretary of State, or whatever authority has jurisdiction. Remember, when you fail to report, the company is generally summarily dismissed, which is your goal after the fact.

When it came to registering vessels that clients used for the purposes of smuggling narcotics into the continental United States,  generally registered them in the UK, but through the obscure method of using British Dependent (Overseas) Territories abroad, as it generally took weeks for those documents to travel laboriously from Anguilla to Cardiff. In the meanwhile, of course the clients used the boat to move marijuana and cocaine,  and occasionally hashish oil into CONUS. That meant any inspection by the US Coast Guard on the high seas ( international waters) would require British notification and consent, and some of these trip had ONLY French-speaking crew on boards, intentionally, to further make communication difficult with monolingual English-speaking American law enforcement searchers on board any USCG or USN ship that stopped them. Confusion to the enemy, gentlemen.

But of course, some clients had erroneously previously registered their vessels in the State of Florida. For those cases, I would contact any one of a number of corporate formation firms in Delaware, have them form a corporation, and do my magic. That meant flying into Philadelphia, and taking a taxi just barely across the border to a tiny bait-and-tackle shop in Delaware, to register my client's vessel, using the new corporate name, and a Bill of Sale with a ficticious name as owner/operator on the document. I obtained new DL numbers and state certificates for the clients to affix, to complete the transformation.

Later that days, I would fly back to MIA, where my client would take possession of the ship registration, and taking the vessel offshore, would jettison the Florida vessel document, and affix the Delaware certificate thereon. I understand that sometimes the name appearing aft would be changed and/or the appearance also altered to give the appearance of another vessel. Some clients would hold onto the documents, and not change their boat until after a smuggling venture, literally carrying them on board as a sort of "back pocket" measure, to be completed far from prying eyes in the US, at a tie of their choosing.

This gap, between January 1, and the date ( September?) when corporate registration in a routine information filing was required was the period in which the smuggling would occur. Delaware corporation formation firms conveniently supply convenience officers and directors names', from their staff, initially, and that serves your purpose if you intend illicit use of the company on strictly a temporary basis. Whether newly-purchased and created shell company or old existing shelf company acquired, that gap exists for laundrymen to exploit.

So long as Secretaries of State do not require the formers of new corporations to actually designate the true owners, with addresses, verifiable telephone numbers and email, up front, financial criminals will continue to abuse the system on a short-term basis, so long as they are able to exploit this Window of Opportunity.