A recent report by Moody’s Analytics sheds light on the phenomenon of “shelf companies,” which are registered entities with no real activities but are often used for offshore operations. These companies, known as “exchange skeletons” in Israel, have become a concern due to their potential involvement in money laundering and terrorist financing.
The study analyzed the registration of 472 million of these “skeletons” to identify any structures that could be exploited for illegal activities. The results were startling, revealing some shocking statistics such as the fact that at least 4,000 people registered as board members of these companies were over 120 years old. For instance, the director of a Belgian company registered in 2018 was listed as 943 years old, suggesting that he lived in the 11th century. Additionally, there were 8,000 board members under the age of 10, with 4,000 under the age of five.
Another interesting finding was that the Pyramids of Giza in Egypt were listed as the official address for registration for 22,000 companies worldwide. Similarly, 61,000 companies were registered at a single mall in Pretoria, South Africa and 8,000 Chinese companies were registered at a single address in Madrid, Spain.
One person held an astounding 5,751 positions in 2,883 companies while a one-person Chinese textile company reported $2 billion in revenue in just one year in 2019. These examples highlight just how prevalent these “shelf companies” are and how much risk they pose to financial systems around the world through fraudulent activities.