Page:2020-07-29 PSI Staff Report - The Art Industry and U.S. Policies that Undermine Sanctions.pdf/43

 individuals, lawyers, or third parties. Despite a shell company's lack of employees and office space, "formation agents" or "company service providers" can provide packages and operational services including mail forwarding, business licenses, local street addresses, telephone listings, and assistance with opening local and foreign bank accounts.

Individuals and companies can use shell companies for legitimate purposes, such as holding assets, making pooled investments, executing reverse mergers or facilitating transfers. They can also be misused to hide the identities of criminals, move illicit proceeds of crime, and commit a wide range of misconduct, including money laundering, human or drug trafficking, fraud, tax evasion, and corruption.

In the art world, shell companies are frequently used when buying or selling valuable pieces of art. For example, shell companies can serve as an intermediary allowing buyers and sellers to shift funds from one jurisdiction to another. But shell companies can also be used to conceal the identity of the buyers and sellers, the source and control of assets, and move suspect funds. In this way, shell companies can be used as financial conduits for the transfer of funds and assets, at times without alerting financial institutions or law enforcement to the parties behind the transactions.

Shell companies can provide this anonymity because there is no requirement that beneficial owners be identified during the entity's formation, opening of financial accounts, or transfer of funds. Tom Cardamone, managing director of the nonprofit research group Global Financial Integrity, illustrated the efforts some parties make to conceal the individuals behind a shell company stating, "you can