THE USE OF SHELF COMPANIES IN TRADE-BASED MONEY LAUNDERING

Twenty years ago, I was a compliance officer in Fort Lauderdale, handling only enhanced due diligence inquiries for an investment company, and having the time of my life catching money launderers as their gatekeeper. I was also moonlighting for the British Compliance firm Complinet, writing financial crime articles; among the topics that I covered extensively was the exposure of the use of shelf companies. That's shelf, not shell.

I took particular pains to acquaint my readers on this important subject for a reason; during my misspent youth as a career money launderer, I artfully used shelf companies for my narcotics trafficking clients. I would quietly fly into the British Virgin Islands (BVI) in a private plane, in my preferred mode of operation, which was to conduct business in a tax haven that I was not comfortable in, as fast as humanly possible, and get the __ out before anyone, especially law enforcement, knew I was even there in person. Keeping the pilot in his seat, with instructions to be ready to depart as soon i returned, I zoomed into Road Town via taxi, and picked up a shelf company from my usual Irish accountant there, hurrying back to the airfield, to depart forthwith.

I used aged shelf companies, formed years earlier, because routine queries by unimaginative compliance officers, generally found a history that satisfied their due diligence queries. Today, laundrymen working TBML often are attracted to shelf companies, because cursory investigations rarely turn up any red flags. Compliance officers handling transaction monitoring should be especially sensitive to the possibility that your money launderers are employing them to deceive you. Don't let them; do a deeper dive into the suspected shelf company; read its annual corporate reports online, to determine whether the previous officers and directors were merely nominees, or frontmen. Look at the company's history with the client; is this the first time they have appeared in a payment? Is the name deceptively similar to that of a reputable company? And what is the jurisdiction where it was formed or incorporated or domiciled? Dig into that company to find out whether it is truly legitimate, and not a shelf company; good luck.