Illegal shell companies

All about illegal shell companies

The business world is constantly seeing new fraudulent methods which people use to make that extra
buck. The tricks are constantly getting ingenious with a number of detailed facts and figures being used.
Such a good example of this is the inception of the illegal shell companies. This basically involves the
creation and sustenance of business operations that do not have any active operations, no significant
assets, no employee listings and such like items that an operational business would have. The ingenious
idea behind the shell corporations is that they are usually formed in a legal manner with the whole
registration process being followed accordingly.

It is the business operation process that the registered companies do not have and this is where the
fraud and trickery comes in. There are a number of ways in which these companies can be used in
including tax evasion, money laundering, obtaining credit and financing, making quick profits after its
sale among many other financial tricks. The trickery involved can be quite detailed and what’s even
worse is that it involves a number of conspirators coming together which can be quite difficult to trace.
It’s inception into the financial industry can be traced way back and the trends keep getting better and
better.

How illegal shell companies operate

It should be noted that the fact of the matter here is that illegal shell companies do not really operate.
Remember that these are just fictitious companies that have been formed for the purposes of
committing a number of fraudulent activities that are likely to be questioned. By forming an illegal shell
company, you limit the chances of the illegal transaction from being traced as it will just appear to be
operating as per the required guidelines of the industry. Money laundering is the major beneficiary of
these shell companies as the pretend to be doing business while in real sense, something else is going
on behind the scene.

In a nutshell, the illegal shell companies can best be described as corporations that exist mainly on
paper. This is because they have no physical presence, they employ no one and they produce nothing.
They however have been formed in a legal way and this is what makes it difficult to trace their activity.
If properly done, the shell companies can conveniently execute a number of fraudulent transactions in
billing schemes, fictitious service schemes, bankruptcy fraud, market manipulation, tax evasion, money
laundering just to mention but a few.

The consequences of illegal shell companies

A detailed audit system is one of the best ways of detecting the existence of as well as the services
conducted by any of the listed shell companies. This is usually done as a result of suspicion on a
company’s operations as well as when a whistle blower decides to inform the authorities after they
detected these activities as they go about their duties. The good thing with tracing these companies
is that there is always someone executing the services by the company’s name and this is where the
investigation begins. They will obviously be resistant at first but once they realize the seriousness of
what they’re likely to face, they are likely to crack and reveal the other conspirators in the game.

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