LatAm Criminals Suspected of Stashing Drug Money in U.S. Shell Companies

Crime groups in Latin America, particularly Mexican drug cartels, could be stashing away a huge sum of their dirty cash in anonymous shell companies set up in the United States, according to a study by Fair Share Education Fund.
Citing the Office of National Drug Control Policy, the report argues that Americans spend US$65 billion on illegal drugs every year, but only US$1 billion (roughly 1.5%) of that money is seized per year, meaning it has to go somewhere.
InsightCrime also reports that Mexican criminal organizations have laundered billions of dollars through the US financial system in recent years, adding that some banks have started closing branches near the US-Mexico border in order to prevent criminals from using their services.
Setting up a shell company in the United States is not a challenge for foreigners, because many American states do not require people establishing companies to disclose the corporation’s beneficial owner.
Under the existing law, American domestic companies cannot set up shell companies inside the U.S. but foreign companies with no actual business activity in the U.S. can do so. “It is akin to what foreign offshore tax havens offer Americans,” argue experts.
Shell companies not only help criminals hide their cash, they also help people launder the money over time through numerous complex transactions. First, they set up companies with an anonymous name and then transfer money to the company’s accounts. Such transfers are often referred to as financial getaway cars.
Disallowing the beneficial owner from hiding his identity could solve the problem once and for all, the report argues. In other words, the U.S. federal lawmakers can blow the cover of money launderers by mandating the collection of true beneficial ownership information from all companies.