Criminals use shell corporations

June 22nd, 2009

More from the Robert Morgenthau testimony to the Senate:

We also receive regular requests from foreign law enforcement seeking to trace money moved through accounts held by U.S. corporate entities. A case indicted in Brazil involved criminal proceeds sent to an account at a U.S. bank. Again, a U.S. shell corporation was created and used to open the account. In this case, the defendants discussed using a British Virgin Island company as the nominee director of the corporation. Consider the following communication from the U.S. incorporating agent to the Brazilian defendant:

The recommendation is to open a US Limited Liability Company (LLC). This entity combine the advantages of a limited with the ones of a partnership, especially about the taxes (we will open “a pass-through entity).”

The instruction is to not mention in the public files the owners’ names.

It is possible to point a Registered Agent to receive the official letters.

The LLC might be managed directly by its owners, but it must be done preferentially by operating managers (equivalent to directors) and that will have duties and responsibilities similar to the corporation’s directors.

The Managers don´t need to be American citizens or to live in United States and their data may, but not necessarily, be disclosure to the public records.

The total cost for the opening procedures is US$ 6,000 including a Nominee Member. Per year the managing will cost US$ 1,600.

This communication, and the examples set forth above, demonstrate how the systems of anonymity in this country’s incorporation processes are being exploited by criminals. They also demonstrate why we need to be able to retrieve beneficial ownership information from the states directly, and not from the sham nominee of a domestic shell company.

Written by Richard Murphy

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