It is a sad state of affairs when law enforcement agencies in the U.S. work hard to locate terrorists as a way to halt future attacks, but our own laws make it a stroll in the park for deadly criminals to create secret companies. These hidden businesses allow criminals to conceal funds right here in the United States. It can be hard to differentiate the dangerous from legitimate when they hide in various cloaks from the white collar to armed dealers. A majority of fraudsters these days will forge false businesses to mask their true identity, their activities, and secretly send funds to anyone or anywhere across the globe. These fake companies, also referred to as shell companies, are even legal to operate even when they are not in operation. You would think these people would have to lurk and hide in international safe havens like the Cayman Islands or Panama, but they can set up shop in America just as smoothly.
These criminals can come in and out of the states with ease thanks to the veil of secrecy that American laws provide to corporations, namely in Wyoming, Nevada, and Delaware. These three states have the lowest taxes and require limited information from those who want to start a business.
How exactly are they doing this and getting away with it in America?
These criminals can do this by using a “registered agent.” There are firms that incorporate hundreds of companies annually for a few hundred bucks. There is a handful of these corporations that are set up as quick as a heartbeat so long as they have an email address handy. There is no need for them to go through any lengthy process to prove their identification as long as they have an email address. These registered agents are great at what they do since they can not only help jumpstart a business but will even go as far as giving the corporations physical locations they can claim as theirs and use as contacts for government filings.
There are legitimate companies that use registered agents; it is not a system used solely by shady characters. However, the system is a double-edged sword easily used by criminals that prefer to do their dirty deeds in the dark. Linking shell companies to their rightful owners is a complex task, and it is unknown how often terrorists use such businesses to help them with their plans. Federal law agencies, such as the FBI, state that shell corporations are ideal vehicles for terrorist financing as shell owners can remain hidden, yet able to transfer funds after opening bank accounts.
Dennis Lormel, a former FBI special agent, says the most critical attribute of shell companies is their ability to obscure themselves. He adds that the lack of transparency is an obstacle to law enforcement. Shell companies in the U.S. have been used to launder cash and promote illegal activities of big name criminals. Even if these crooks are discovered, the registered agents who helped them remain untouchable.
Congress has yet to take any action despite multiple bills from lawmakers to eliminate the issue. The absence of legal action is not helping America; we are left behind in comparison to other countries successes unveiling criminal enterprises. Cy Vance, a district attorney for Manhattan, stated, “Time and again, we find that our international partners are better situated to assist us in thwarting terrorism and financial crime.”
There are a few criminals that will use shell companies along with legal business operations as a way to confuse those of legal authority by appearing legit. For example, the family behind Peruvian drug trafficker, Sanchez-Paredes, used a mix of shell companies and gold mines in Peru to conceal their illegal cocaine proceeds for years. Law enforcement eventually discovered that they were producing cocaine in 2012.
Luke Bojovic was one of Serbia’s top wanted criminals for his participation in the assassination of Serbia’s prime minister. Another notorious Serbian criminal, Darko Saric, was charged by the country for trafficking over five thousand kilograms of cocaine. According to documents discovered by the Organized Crime and Corruption Reporting Project, both of these men also used shell companies, located in Delaware, to achieve their illegal activities. A few shell companies used by the pair were traced to the same registered agent. The Deleware firm was called Harvard Business Services, a corporation of no relation to Harvard Univesity. It represented over ten thousand companies in a single year. The men’s names were never on any paperwork while they were working with the firm. Richard Bell, the HBS President, stated, “We are as concerned as anyone about the fraudulent use of Delaware companies by a few of the people who obtain them. These few who misuse them threaten our existence and we come down hard on them whenever we are alerted to such cases.”
There are possibly thousands of other cases similar to these involving terrorism in America right now. When will these false companies the government is aware of come to an end?