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AML Standards Highest In Offshore Territories

Thursday, September 27, 2012

A new study from the Centre for Governance and Public Policy at Griffith University, Australia, has confirmed that a number of offshore territories have substantially stronger safeguards in place to prevent the use of shell companies for anti-money laundering and terrorism financing purposes than many advanced onshore nations such as the United Kingdom and the United States.

The report, which assesses the ease of establishing untraceable shell companies internationally, says that: "Some of the top-ranked countries in the world are [territories] such as Jersey, the Cayman Islands and the Bahamas, while some developed countries like the United Kingdom, Australia, Canada and the United States rank near the bottom of the list."

The report concludes that it is easier to obtain an untraceable shell company in the United States than in any other country except Kenya.

"Against the conventional policy wisdom, those selling shell companies from tax havens were significantly more likely to comply with the rules than providers in OECD countries like the United States and Britain," the report states. "Another surprise was that providers in poorer, developing countries were also more compliant with global standards than those in rich, developed nations."

The authors said that a research team had impersonated a variety of low- and high-risk customers, including would-be money launderers, corrupt officials and terrorist financiers when requesting the anonymous companies. In total 7,400 emails were sent to more than 3,700 corporate service providers in 182 countries worldwide. The report found however, that corporate service providers were "significantly less likely" than other marketers of shell companies to reply to potential terrorists or to offer anonymous shell companies to customers who are possibly linked to terror.