The purpose of this article is to review the use and application of shell entities, as they facilitate tax evasion, impede investigations, and harm society. This article details the types and characteristics of shell entities, reviews actual cases to exhibit how shells are abused, outlines reasons shells disguise beneficial ownership, and analyzes steps taken by countries and organizations to thwart the abuse of shell entities. Many types of shell entities are used by tax evaders and are often layered in an intricate network which conceals the identity of beneficial owners. Nominees and bearer shares are used in tandem with shell entities to optimize concealment. Accountants, lawyers, and trust and company service providers facilitate and promote the use and abuse of shell entities by tax fraudsters. The analysis makes clear the reasons for and means by which tax evaders conceal trillions of dollars of income and wealth that remain untaxed and may be used for nefarious purposes. The findings demonstrate that shell entities used to conceal income and wealth prevent untold trillions in taxes from being collected by governments worldwide. This lack of revenue facilitates income inequality and skews national economic and fiscal policies. The G-8, Financial Action Task Force, and G-20 have begun steps to improve ownership transparency, but the effort is moving at a modest pace. There is a need for more concerted action by national governments, organizations, the United Nations, and law enforcement to improve ownership transparency and information exchange regarding shell entities.
How Shell Entities and Lack of Ownership Transparency Facilitate Tax Evasion and Modern Policy Responses to These Problems,
102 Marq. L. Rev. 111
Available at: https://scholarship.law.marquette.edu/mulr/vol102/iss1/6