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Shopping for Anonymous Shell Companies: An Audit Study of Anonymity and Crime in the International Financial System

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  • J. C. Sharman
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    Abstract

    The last few years have seen an international campaign to ensure that the world's financial and banking systems are "transparent," meaning that every actor and transaction within the system can be traced to a discrete, identifiable individual. I present an audit study of compliance with the prohibitions on anonymous shell companies. In particular, I describe my attempts to found anonymous corporate vehicles without proof of identity and then to establish corporate bank accounts for these vehicles. (Transactions processed through the corporate account of such a "shell company" become effectively untraceable—and thus very useful for those looking to hide criminal profits, pay or receive bribes, finance terrorists, or escape tax obligations.) I solicited offers of anonymous corporate vehicles from 54 different corporate service providers in 22 different countries, and collated the responses to determine whether the existing legal and regulatory prohibitions on anonymous corporate vehicles actually work in practice. To foreshadow the results, it seems that small island offshore centers may have standards for corporate transparency and disclosure that are higher than major OECD economies like the United States and the United Kingdom.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.24.4.127
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    Bibliographic Info

    Article provided by American Economic Association in its journal Journal of Economic Perspectives.

    Volume (Year): 24 (2010)
    Issue (Month): 4 (Fall)
    Pages: 127-40

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    Handle: RePEc:aea:jecper:v:24:y:2010:i:4:p:127-40

    Note: DOI: 10.1257/jep.24.4.127
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    1. J.C. Sharman, 2008. "Regional Deals and the Global Imperative: The External Dimension of the European Union Savings Tax Directive," Journal of Common Market Studies, Wiley Blackwell, vol. 46, pages 1049-1069, December.
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    Cited by:
    1. Guerino Ardizzi & Carmelo Petraglia & Massimiliano Piacenza & Friedrich Schneider & Gilberto Turati, 2013. "Money Laundering as a Financial Sector Crime - A New Approach to Measurement, with an Application to Italy," CESifo Working Paper Series 4127, CESifo Group Munich.
    2. Patrice Pieretti & Jacques-François Thisse & Skerdilajda Zanaj, 2014. "Offshore financial centers and bank secrecy," CREA Discussion Paper Series 14-02, Center for Research in Economic Analysis, University of Luxembourg.
    3. Butkiewicz, James L. & Gordon, Leo-Rey C., 2013. "The Economic Growth Effect of Offshore Banking in Host Territories: Evidence from the Caribbean," World Development, Elsevier, vol. 44(C), pages 165-179.
    4. Shafik Hebous, 2011. "Money at the Docks of Tax Havens: A Guide," CESifo Working Paper Series 3587, CESifo Group Munich.

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