Shell Company
A company that exists on paper — and only on paper.
A shell company is a legally incorporated entity with no independent operations, significant assets, ongoing business activity, or employees — registered, compliant, and in most jurisdictions entirely unremarkable to look at.
This is not inherently criminal. Legitimate uses include holding intellectual property, simplifying corporate structures across jurisdictions, and managing assets during mergers. The problem is structural: because a shell company has no operations, it has no operational paper trail. Nothing to audit, no payroll to examine, no supply chain to trace.
In financial crime, that absence is the point. Each additional shell in a chain adds a jurisdictional layer and another set of records to subpoena across multiple legal systems, each with its own disclosure requirements and timelines. Unwinding the chain requires MLA requests and cooperation from each jurisdiction in sequence. The 1MDB funds moved through shells across Singapore, Switzerland, Luxembourg, and the United States before reaching a Manhattan penthouse, a Picasso, and a Hollywood production company. By the time the legal process reaches the far end of a chain like that, the asset is frequently gone.
Definition drawn from FATF Glossary and AML/CFT Library (aml-cft.net)