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Tips for linking shell companies to their secret owners

1068 points by chippy 3y ago

deleted 3y ago
[deleted]
ryandrake 3y ago
I don't even know why shell companies and companies with secret ownership are even allowed. Well, I mean we all know the real reason: because it benefits rich people and they make the rules. But, what would a politician disingenuously cite as the public interest aligned justification for having these entities? Are there legitimate non-nefarious uses?
- ebiester 3y ago
  Game theory: Any country can do it, and the company in which the corporation is registered is not going to suffer. So what is their incentive not to allow it?
  - dartos 3y ago
    Ideally it should be votes, but that doesn’t really work out like you’d want :(
- mkmk 3y ago
  I'm not very familiar with shell companies, so I'm curious – why isn't this just a matter of privacy for those involved? I'm generally pretty understanding of pro-privacy-oriented behavior.
  - arrosenberg 3y ago
    Oligarchs using transnational legal arbitrage to avoid paying taxes isn't a matter of privacy.
    - tensor 3y ago
      Nor is it due to the existence of shell companies. Rather it's due to poor enforcement and loopholes in tax law. You also don't need to make any of the information public to enforce it anymore than it's required to make your personal earning information public to enforce you paying taxes.
      - arrosenberg 3y ago
        It's hard to take that position seriously. The people using the loopholes are the ones that pushed to put them in the law and degraded enforcement budgets. One hand washes the other and it takes place in the dark. Let's put a little sunshine on it and see what happens. We might find some very interesting networks exist...
  - itopaloglu83 3y ago
    I don’t know any other case where someone can own an entity like a house, car, estate, etc. where they get to hide who benefits from it.
    - toomuchtodo 3y ago
      You can hide ownership in real estate using land trusts in states that support them. You can fund an LLC with a vehicle to hide ownership of the vehicle by VIN or plate search. In both cases, startup costs are a few hundred dollars, and ~$100-200/year upkeep per asset. Trusts in general are simply good estate planning compared to probate costs, at least on the topic of real estate holdings and titling.
      - mcguire 3y ago
        Those are essentially shell companies.
        deleted 3y ago
        [deleted]
      - ensignavenger 3y ago
        New Mexico has fairly decent LLC privacy and you don't have to pay an annual fee to upkeep your LLC at all. Just need to have a registered agent, which can be had for under 100/year.
        toomuchtodo 3y ago
        Appreciate the info!
      - itopaloglu83 3y ago
        Could you elaborate on reasons to do so? Using LLC to limit liability makes sense, but I’m not familiar with hiding identity behind a corporation.
  - micromacrofoot 3y ago
    because it's a lot easier to have privacy when you're rich the default for normal people is for all of this data to be public unless you can either navigate bureaucracy (costs time and money) or pay someone to do it for you (costs money)
  - digging 3y ago
    I'm quite big on privacy rights for indibviduals but I also feel that when corporate wealth (thus, influence on culture and politics) reaches a certain scale, radical levels of transparency become very important for the health of our society. For an extreme example, the public deserved (and still does) to know who were the individuals at Shell devising a decades-long misinformation campaign about climate change -- and that the bullshit they were hearing about climate change being fake was driven by nothing but greed. To address inevitable replies: No, I don't know exactly where the line is (or lines are - it should probably be a tiered system), and I recognize defining those lines is itself a position of immense power. Those are solvable problems though and don't make the idea bad. (It could still be a bad idea, but for other reasons.)
  - truckerbill 3y ago
    It's about the usage. No single dogma ever makes sense without context. These are abused by many to hide taxable wealth. It's in the public interest to understand what very powerful people are doing , because the public are usually getting the short end of the stick- this should override any ideology regarding 'privacy', 'freedom' and other fuzzy words (not that some interpretation of these things isn't also important)
  - ensignavenger 3y ago
    It is very much a matter of privacy for most folks doing it. And you don't have to particularly be rich to benefit from it.
  - Veserv 3y ago
    Not all are bad, but they are frequently abused to not only protect privacy, but to protect against legitimate legal need. It is like hiring a contractor on your house who gives you a false name so they can skip out of town when you figure out they cheated you. There is no legitimate purpose for that degree of privacy. They wanted privacy for the express purpose of providing you no legal recourse. Pseudonymity is perfectly valid, but there needs to be efficient, effective, and crystal clear means to pierce it and find the actual humans making the decisions with intent when there is a legitimate and well-supported legal need.
    - ensignavenger 3y ago
      Can you cite any research on just how frequent you mean by "frequently". It certainly happens sometimes, but I have found no evidence that is is the norm.
      - Veserv 3y ago
        Why does that matter? I said that pseudonymity is perfectly fine, there just needs to be a straightforward and effective means of piercing it when there are legitimate legal purposes. Are you arguing that because it is not a majority of cases that they should be impervious even if there are legitimate legal purposes? There are enough high profile cases of shell corporations being used for unsavory and explicitly illegal behavior, to the extent that it is literally a meme, such as the crimes unveiled in the Panama Papers [1] that simple and robust mechanisms to prevent abuse are warranted even if abuse is uncommon. It is not like being able to pierce the privacy with a court order is even some new mechanism, you can already do that, it is just expensive, time-consuming, and difficult if they fight. [1] https://en.wikipedia.org/wiki/Panama_Papers https://en.wikipedia.org/wiki/Panama_Papers
        ensignavenger 3y ago
        The cost of providing such mechanisms and properly securing them against abuse have to be weighed against the benefit. In order to know the benefit, we need to know the size of the problem we are seeking to solve, and whether or not the proposed system would actually solve the problem. So yes, knowing the size of the problem matters a lot, and is a good first step to running a cost benefit analysis.
- tensor 3y ago
  Yes, privacy. Corporations are often used for trusts and investments. I wouldn't call those nefarious at all, though yes they are mostly only useful for more wealthy individuals. These structures all still pay taxes and are 100% legal. Arguments about tax law being good or bad are really a separate issue, and those should be addressed directly by updating the law, not erasing privacy for wealthy. As much as the wealthy rightly get shit on for various things, they are still entitled to the same rights as everyone else.
  - lostlogin 3y ago
    > they are still entitled to the same rights as everyone else. Has there ever been a time when the wealthy had less rights than the poor? The speeding ticket fine which is charged as a percentage of ones wage comes to mind. https://www.theguardian.com/world/2023/jun/06/finnish-businessman-hit-with-121000-speeding-fine https://www.theguardian.com/world/2023/jun/06/finnish-busine...
    - vlovich123 3y ago
      That’s not really less rights though. That’s like saying the rich have fewer rights under progressive taxation. And no, generally the more rich and/or powerful you are the more rights society provides you. Even countries which strive for more equality simply try to shore up the most egregious instances but there’s always a difference. That’s because not all rights matter equally to everyone. For example, rich and poor both don’t have the right to sleep on a park bench but in practice that right is only particularly relevant to one party.
    - sdeframond 3y ago
      Do you mean that fining more for richer people is unfair? That's an interesting view. One could argue that a flat fine allows rich people to break the law more, because they can afford it. Which IMHO seems pretty unfair.
      - lostlogin 3y ago
        I agree with it and think there should be more penalties like it.
- CPLX 3y ago
  Not every corporation is some wealthy shadow network. The owners of an abortion clinic, or a store that sells fur coats, or a therapy practice for the criminally mentally ill, all might have good reasons why they’d like additional privacy.
  - atomicfiredoll 3y ago
    It could also be a programmer who is within their legal right to start their own company, but who doesn't want their current employer harassing or singling them out for it. Further common situations involve trying to keep details out of the public record because they can be abused by bad actors; ones who may be looking to spam you, engage in a frivolous lawsuit, or personally harass you/your family. At least these are some of the scenarios mentioned by companies that do asset protection. Edit: In regards to harassment, think about the abuse retail, fast food, or other customer-facing employees endure for perceived slights. It feels easy to understand why average small business owners would want privacy and to keep things in legal channels. Personally, I think the government knowing who's in charge (Corporate Transparency Act) is a good halfway point, but it's not unrealistic to be concerned about leaks or abuse with that system.
- tetromino_ 3y ago
  As a working class individual, you can get excellent financial privacy. You can stick your $10k in savings in cash in a glass jar behind your bed, and neither the government nor big banks nor investigative journalists get to know how much is in thar jar, and they have no say what you spend that money on and when. A more wealthy individual has no such privacy. Their wealth is not truly wealth and not truly theirs, it is fundamentally a trust-us IOU from a bank or a stockbroker which is shared with all kinds of parties, a publicly visible number on the screen which at any second could turn zero or negative on the orders of a corrupt official or due to a buggy algorithm or mistyped name on a sanctions list. The more wealthy individual yearns for a glass jar - but no jar is big enough to hold the sums the more wealthy individual operates with. Hence, shell companies.
  - jhp123 3y ago
    The largest glass bottle seems to be 1700L. $1 million is only about 11 liters of $100s. So you could store about $100 million in a glass jar.
    - janalsncm 3y ago
      At 5% inflation $100M loses almost $14000 of purchasing power per day.
- JumpCrisscross 3y ago
  > Are there legitimate non-nefarious uses? Have you formed an entity? In Delaware it’s file and go. You don’t need a lawyer nor to fill out a bunch of paperwork. That’s efficient. Where we demand disclosure is when that entity touches money through the banking system.
tiahura 3y ago
[flagged]
- none_to_remain 3y ago
  I guess some people have "privacy" and others have "secrecy".
- deleted 3y ago
  [deleted]
nick7376182 3y ago
I've heard that you can create two LLCs which own each other, and be completely anonymous. This should be possible for regular people to do at a small nominal cost. Not sure if it works in practice!
- LoganDark 3y ago
  How exactly would you pull that off without having to create an LLC owned by yourself first? This sounds like just something you heard once, I would love to know more if it's actually a thing.
  - hackable_sand 3y ago
    Awhile ago I did some lay research to see if I could form a Corp that owns itself. Iirc the legislation actually accounts for recursion. I do not remember if they require the owners to be human though. Either way I was doubly disappointed...
    - LoganDark 3y ago
      > I do not remember if they require the owners to be human though. I don't think there's yet any way for a non-human to count as a legal person. Entirely possible there may never be.
    - BLKNSLVR 3y ago
      Sounds like something in Accelerando.
nocoiner 3y ago
These are great techniques and helpful advice, but note that they are basically of zero use whatsoever in the case of (for instance) a Delaware LLC. The amount of information regarding beneficial ownership that’s out there varies by jurisdiction and entity type - and again, these tips are great ways to dig into those and quite likely come up with some interesting findings in a lot of cases - but in most cases a Delaware LLC is basically a black box.
- jgalt212 3y ago
  very true, but you can glean some clues regarding any entities that came before the Delaware LLC, or another state LLC that has a similar name, or does transactions with the Delaware LLC. Or you can search on those you think may be involved with the Delaware target. Their names often show up in other less opaque filings. So, you man not find the smoking gun, but you can sure gin up a lot of smoke.
  - nocoiner 3y ago
    For sure. By way of further example, if you’re looking into land owned by an LLC (or other entity), the LLC had to be conveyed that land at some point - searching the county grantor/grantee index of deeds will turn up who owned the land before and may be suggestive as to who owns the LLC (or maybe not - maybe ownership of the LLC was conveyed instead of the real property interests specifically to avoid showing up in the county records - it’s a fun puzzle).
  - lsllc 3y ago
    In fact many states require LLCs created in other states to register as a foreign entity if they do any business in that state (incl. having a presence there). For example in Massachusetts [0]: Pursuant to M.G.L. Chapter 156C, §48, a foreign limited liability company doing business in the Commonwealth must submit to the Corporations Division within ten days after it commences doing business in the Commonwealth, an application for registration as a foreign limited liability company ... So even if you form your LLC in Delaware, if you live/work/conduct business in Mass, then you must also register there -- it costs $500/yr and the statute requires that a non-trivial amount of information about the company be supplied including the names/addresses of "managers" for the entity as well as the registered agent. I don't know what the privacy laws for foreign entities in registered in MA are (if any), but I suspect not the same as say Delaware. If you have a footprint in more than one state, you may be required to file as a foreign entity in multiple states. [0] https://www.sec.state.ma.us/divisions/corporations/filing-by-subject/limited-liability/corporations-foreign-limited-liability-company.htm https://www.sec.state.ma.us/divisions/corporations/filing-by...
jeffbee 3y ago
Get the filings for the shell company from secretaries of state. Search for other entities that have the same mailing addresses. Search local records for construction permits, zoning applications, business licenses and suchlike concerning the same addresses. These cross-checks have worked well for me in the past.
- nocoiner 3y ago
  These are extremely good tips. The value of the address of the entity may be marginal (a lot of times, the address listed on the formation paperwork is the address of a registered agent services company, which may handle thousands and thousands of unrelated companies) but searching other databases for the name of the entity (paying close attention to spelling and abbreviation - though often, this gets flubbed in other filings) or the person who formed it can turn up some interesting connections.
- deleted 3y ago
  [deleted]
spxneo 3y ago
this area is super murky with legitimate use cases for shell companies. im wondering why this is an area that hasn't been solved by eager engineers. seem like there is a large gap to fill for people needing turnkey IBCs but one problem might be using offshore data centres. I often see advertisements for incorporating offshore but there is no legitimate way to know which are authentic and which are just skimming on top of what you can do by yourself. It's quite fascinating enough that I need to hire a CFO or someone specifically familiar with IBCs
- snarf21 3y ago
  Genuinely curious: What are the legitimate use cases for shell companies that hide who owns them?
  - IncreasePosts 3y ago
    Public figure who doesn't want randos knowing where their house is. Non-public or public figure who doesn't want their name associated with certain business activities that they partake in.
    - dheera 3y ago
      Or even non-public figure not wanting randos knowing where their house is. I'm not a public figure and I don't want where I sleep posted all over the internet. I don't have the budget for security if some Twitter fool decides to give me a death threat because of a comment.
      - deadbabe 3y ago
        If someone really wants to know where you live, they will find you. If the information in your bio is actually yours, there’s already plenty to work with. :)
        rrr_oh_man 3y ago
        A lock is not to keep out bad guys who want to get in, but to keep good guys honest. Same with privacy. Why not install a camera on your toilet while we’re at it? Or do you have something to hide?
clamprecht 3y ago
I see no comments so far about the Corporate Transparency Act[1] and how it affects privacy with LLCs, etc. The US government will soon have a database of all (complying) beneficial owners. This database will eventually be hacked, leaked, shared with local law enforcement (further allowing it to be leaked). How will the "rich people" maintain privacy/secrecy after the Corporate Transparency Act? [1] https://www.uschamber.com/co/start/strategy/small-business-corporate-transparency-act https://www.uschamber.com/co/start/strategy/small-business-c...
- yieldcrv 3y ago
  It was immediately challenged as soon as citizens could get standing this year A judge ruled it unconstitutional - narrowly only for the organizations and their members that filed the case - and its currently being appealed by the US gov its going to the 5th circuit though so rich people don't have to do anything, this regulation is DOA its interesting what cases make headline news and whats relegated to law journals
  - cj 3y ago
    > its interesting what cases make headline news and whats relegated to law journals It certainly made headlines to people its impacts. 2 of my law firms sent out alerts. (They send out alerts maybe 1-2 per year whenever a significant legal change is happening - I think the last alert was the Wayfair sales tax Supreme Court decision)
    - yieldcrv 3y ago
      yeah I filed a flurry of anonymous LLCs via intermediaries via my lawyer at the end of last year since the new law initially only affects business entities created on or after Jan 1 2024, and older ones starting to need reporting just in Jan 2025 I took one look at the law and figured that I won’t have to do it by 2025 because it’ll get declared unconstitutional so far my bingo board is working out
- arminiusreturns 3y ago
  Rich people get out of it because all their main hidey-holes (Banking, Insurance, etc) are exempted.
kmod 3y ago
I think it's fascinating that when the topic is "shell companies" that the HN discourse is essentially "if they have nothing to hide then they don't need secrecy". I think that if the article were about linking "tor users" with their secret owners then we would see the opposite stance being taken. I'm not taking a position here, and I'm not saying even that these stances are necessarily contradictory, but just that the blanket argument "X shouldn't get to be secret because I don't think they have a legitimate reason" doesn't differentiate between these two cases.
- tgv 3y ago
  Companies aren’t people.
  - BadHumans 3y ago
    I'm people. I had a secret LLC I was doing contracting out of because I didn't want my companies'address out there easily. My companies' address being my house.
    - and0 3y ago
      I also have an LLC for software and didn't love having to put my address, since I don't have a storefront or anything either, but I don't think it reveals any more info than someone could find from having your name in the first place.
    - czbond 3y ago
      In the future, you can proxy the address via a registered agent.
    - nickpp 3y ago
      When I set up my LLC I used all available ways to protect my name and address. No reason really, but I guess growing up hearing my grandparents stories about the communist take-over of our country taught me what happens when you are a target because you are publicly linked to your wealth.
    - 3y ago
golergka 3y ago
Both encryption and shell companies are technologies to achieve privacy, and both are sometimes abused by bad actors. It's very sad to see commenters here fail applying the same principle to both.
- joshstrange 3y ago
  Honest question: What are some examples of legitimate uses of shell companies? I don't know enough about this to know "good" cases, I'm only aware of some bad ones. I can come up with tons of "encryption" good/bad examples but I'm coming up blank on good shell companies.
  - VMG 3y ago
    Evading stalkers or organized crime. The state cannot always help
  - balderdash 3y ago
    Taxes (normal tax minimization), regulatory compliance (need a local company), liability protection (wall off specific risks), financial liability management (e.g. opco vs holdco debt), etc.
  - golergka 3y ago
    > Honest question: What are some examples of legitimate uses of shell companies? I have an answer to that, but instead of going down this route, I want to ask you: do you want to defend you right for privacy by coming up with uses that other people would find "legitimate"? Or do you want the right for privacy by default, without having to defend yourself in such a way?
- BLKNSLVR 3y ago
  > It's very sad to see commenters here fail applying the same principle to both. I don't think the two are comparable, and just applying "are technologies to achieve privacy, and both are sometimes abused by bad actors" to both as if that's the start and end of the discussion is surprisingly dismissive. The 'scope' of encryption is fairly limited in comparison to the scope of a company that can operate under the directorship of a person or persons who are entirely protected from any legal responsibility for the actions of said company. I may be blinded by personal bias, but I just don't see but the most marginal comparison of these two concepts.
agys 3y ago
Not shell companies but made me remember They Rule…! https://theyrule.net https://theyrule.net
- bluerooibos 3y ago
  Jesus. Perhaps showing my ignorance but I'm surprised by the amount of overlap these board members have across major companies.
  - tristor 3y ago
    They Rule is outdated, but the unfortunate truth is that there's been even more consolidation since it first went online. This is partly due to the consolidation of liquidity through institutional investors. It's one of the consequences of passive investment strategies being dominant among retail investors.
  - bozhark 3y ago
    Companies, state dept., politicians, revolving door
  - ensignavenger 3y ago
    Some of these people are investors or represent investor groups. As such, the group they represent will own stakes in multiple companies, and often have board seats on many of the companies. Others will be an top executive at one company, and also serve on the board as an advisor of a few other, non-competing companies (usually non-competing). Those are probably the most common scenarios where some one would serve on multiple boards.
    - poorlyknit 3y ago
      Does that change anything though?
      - ensignavenger 3y ago
        I am not sure what the concern is in the first place, so I am not sure if it changes anything or not. I was just adding my own perspective on the situation.
Joel_Mckay 3y ago
Double blind trusts are specifically designed to keep those in control of the assets isolated from public scrutiny and taxes. The fact the News cycle quickly forgot about who the Panama Papers exposed... proved there is a deeper cultural issue in North America. This has been going on for over a century, and it is foolish to think one could stop someone's full-time job hiding wealth. =)
- NotYourLawyer 3y ago
  > Double blind trusts That’s not a thing.
  - Joel_Mckay 3y ago
    I can see how you might believe that... One should get a well paying job in Monaco.
    - NotYourLawyer 3y ago
      Eh I have a US-centric view. Maybe that term means something in Monaco.
      - Joel_Mckay 3y ago
        Many boards were controlled by US proxies at one time. Perhaps things are more transparent now, but I doubt it... =) Only posers build a private bank in the Cayman islands.
jmyeet 3y ago
An awful lot of tax evasion could be solved with just two things: 1. Clear beneficial ownership of any company; and 2. Taxing at source when the beneficial ownership isn't clear. This particularly applies to real estate. Two of the biggest tax havens now are the US and the UK. The US requires all sorts of financial disclosures from other countries but doesn't reciprocate. The UK (London in particular) seems to exist solely to allow billionaires from sanctioned countries to launder money through real estate. Like that's the entire business model.
p1necone 3y ago
Can someone do this with userbenchmark? I'm dying to know what unhinged maniac runs that site.
- Stagnant 3y ago
  There is no mention of any company name on userbenchmark's site so there is nothing to search. I guess not selling anything and not accepting donations helps to keep the owner private.
beryilma 3y ago
Shell companies, in a sense, have been used to evade local laws and ordinances, even by semi-public institutions. IIRC, Harvard University, for example, used LLCs and law firms to buy land secretly in Brighton and Cambridge, MA against the policies of local governments. It would be good to know the real institutions behind such transactions...
- bozhark 3y ago
  If they can get around it, it’s not against policies. Policies need to change
patrakov 3y ago
The https://opencorporates.com/ https://opencorporates.com/ site is also useful for finding companies registered using a stolen identity or a fake address that matches yours. In the past, I was a victim of some bad guys registering a shell company using my address in a not-yet-built house. I reported that to the tax officers back then.
JumpinJack_Cash 3y ago
YCombinator accepts Cayman Islands LTDs and LLCs too IIRC. It's not always about dirty deals of trafficking substances and arms, it's honestly desirable for a corporation to be located in a tax neutral jurisdiction and then the various owners can vote with their feet where to locate themselves according to their individual preferences. The inevitability of death and the fact that you can't take money with you (and also the fact that people accostumed to a certain lifestyle would find their life pretty lacking in a 0% tax country) would compel the aforementioned owners to cash out and start spending at some time and then non-0% tax countries would get their fair share tax on their capital gains, income as well as consumption. If a guy never cashes out and never spends, then what can you do? They are just monodimensional, obsessed individuals, perhaps heavily on the spectrum too, that's their tax right there, not a monetary tax but still a huge tax and a heavy burden that they "paid" throughout their lifetime.
- deleted 3y ago
  [deleted]
- tomrod 3y ago
  > that's their tax right there, not a monetary tax That's not how taxation works.
- heroprotagonist 3y ago
  > perhaps heavily on the spectrum too That's not how autism works.
- wizzwizz4 3y ago
  > They are just monodimensional, That's not how linear algebra works.
atum47 3y ago
Funny. I did a job interview once that covered basically this. Building a full stack app that would track the other companies of a given billionaire. Looking back at it, I did a bunch of code challenges crazy like that.
Projectiboga 3y ago
There is a new national law for all corps to have their beneficial owners disclosed to the Department of the Treasury by the end of 2024, and all new firms within 30 days.
- kazinator 3y ago
  Probably backed by those who benefited from it, as another way to to screw young up-and-comers.
  - readyman 3y ago
    any anyone who understands how capitalism works would understand this will never change under capitalism
    - syklep 3y ago
      Why call it capitalism as opposed to a free market? 'Capital' stands for money but the 'market' pressure is why these dark patterns emerge.
      - kazinator 3y ago
        Because it's not a free market with those with deep pockets manipulate the rules that get enshrined into law.
        autoexec 3y ago
        Which means there can never be a free market since there will always be people able to bribe and manipulate in order to get their way. It doesn't matter how much oversight and transparency you have, those things can be slowly chipped away overtime and replaced with laws that favor the ultra rich at the expense of everyone else. I'd love to be wrong about that, but I've never seen an example of a country where wealth had no power to influence law.
        2y ago
mihaitodor 3y ago
This podcast interview with Brooke Harrington gave me some good insights into how people manage offshore wealth: https://www.preposterousuniverse.com/podcast/2023/05/22/237-brooke-harrington-on-offshore-wealth-as-a-complex-system/ https://www.preposterousuniverse.com/podcast/2023/05/22/237-...
djaouen 3y ago
I was going to post something “low content”, but instead, I will say: please donate to the ICIJ[1] and/or the OCCRP [2] if you have the funds! [1] https://www.icij.org/ https://www.icij.org/ [2] https://www.occrp.org/en https://www.occrp.org/en
- pksebben 3y ago
  Forgive my ignorance, but could you expound a little on what makes these institutions important? Like, why do you consider them trustworthy and what specific good do they provide?
  - djaouen 3y ago
    They are the first two organizations referenced in the article. :)
LAC-Tech 3y ago
I'm much more concerned about the naked corporate lobbying that occurs in every "democracy" on earth than I am shell companies.
Linda231 3y ago
[dead]
Havoc 3y ago
Colour me unimpressed. It's mostly picking up info from the regulators in the various jurisdictions. Glorified alternate UI frontend to public info basically. That's not nearly enough to untangle what's going on in complicated multi-jurisdiction structures - even for structures not designed to conceal. To put it into terms hn will understand - it's the equivalent of claiming to deduce how software works from the source code filenames only. I mean yeah kinda, but not really. Also, article is missing WorldCheck.
indus 3y ago
Isn’t all of the data available to the government especially in the US via federal banking system? Every dollar transaction in the world is reported back to banks in Wall St.
- deleted 3y ago
  [deleted]
Animats 3y ago
Now this would be a good LLM application - something that can query all those sources and dig until the actual owner appears.
balderdash 3y ago
I find it ironic in an interesting way that on HN there is such a strong privacy bent generally, but on the topic of financial privacy it seems to be the reverse
- Staple_Diet 3y ago
  There's a marked difference between an individual's right to privacy and that of a business. Shell companies are financial instruments designed to obfuscate ownership, usually for tax evasion purposes. Therefore increased transparency is, for the most part, in the public's interest.
  - balderdash 3y ago
    Why is it in the public interest to know who owns a company? Sure for specific groups of people, transparency is in order (elected politicians etc.) but wouldn’t financial disclosure laws work better? Why isn’t it the general public’s prerogative to know that I own 5% of a shell company (LLC) set up specially for the purpose of pooling an investment in a new venture? shell companies are just companies, suppose the vast majority of which are formed for perfectly normal reasons,
    - taway789aaa6 3y ago
      "Corporations are people too, my friend." If they can have "free speech" and are "legal persons" then the public _surely_ has an interest in knowing who is benefiting (the ultimate beneficial owner) from that corporation's actions.
  - IG_Semmelweiss 3y ago
    The founding fathers published anonymously to obfuscate ownership of their penmanship. Would it be in the public interest that their identities were revealed and the lot be killed by the King ?
  - diego_sandoval 3y ago
    It's in the public interest only because of the particular way that taxes work. If sleeping with someone was a taxable event, would that mean that it's OK to spy on people's bedrooms? After all, it's in the public interest. In principle, I think that taxing only land ownership and pollution is the theoretically fair way to do taxation. And land ownership doesn't require obtaining any data that isn't necessarily known by the government in the first place.
BLKNSLVR 3y ago
"Shell corporations are companies that don’t actually do any business" This, I think, is a fairly key differentiator between valid and invalid use of incorporation. If a company doesn't do any business, then it shall not have a right to exist as it has no reason to exist, as the reason companies exist is to do business. One may argue there are other reasons a company may exist, but I'd argue those reasons only exist as an unintended consequence of the ability to exist as 'shields' or 'cut-outs' as discovered by those familiar with the peculiarities of international law and accounting/finance.
- aelhaji 3y ago
  No, that statement is a subjective assessment. Any company, including shell companies, will have business activity on paper. In other words, there are invoices, financing or a combination. This is why it’s difficult to define shell companies. A more realistic proxy is to look at the ratio of employed people by the particular entity to revenue or some other financial metric. Most shell companies don’t have many employees while the financial figures might be huge. Again, this might be a bona fide structure as part of an international holding but at least you have an objective filter as a starting point.
  - boringg 3y ago
    Hasn't there been a lot of talk about AI enabling the 1 person billion dollar company recently?
  - lIIllIIllIIllII 3y ago
    This isn't my area but I feel like they might be kind of easy to define. They're wrappers around their inner companies. I'm sure nothing has been done because pretty much every corpo lobbyist represents a company that uses them.
    - adgjlsfhk1 3y ago
      the problem here is that most companies are wrappers around inner companies.
globalnode 3y ago
financial privacy is the way you get corruption - i dont care if you dont want anyone to know you spent a bazillion dollars on your yacht, too bad. companies especially dont deserve special consideration in this respect. as a community we could expose corruption and greed at the highest levels if financial privacy ceased to be a thing. edit: ofc this is what the whole article is about, ive calmed down and read it now :D... still, dont know why these things are allowed to go on
- hackernewds 3y ago
  soooo no crypto?
  - globalnode 3y ago
    crypto currency? afaik thats not private but trackable. crypto for general privacy? sure, we have a right to communicate in private what i dont like is financial privacy
    - travoc 3y ago
      Put your money where your mouth is and publish all of your bank and credit card statements.
      - globalnode 3y ago
        banks have all this info - its already published to 3rd parties via rewards schemes and tbh i wouldnt be surprised if the banks sell it as well. retailers resell it... none of this data is private. in effect i am publishing it already. but as you say, i would gladly have it all posted online for anybody to see if it meant financial transparency for all. edit: perhaps i wouldnt like my bank balance published... that may make some individuals targets. in thinking about it perhaps i would prefer financial "transaction" transparency. then we would have to guard against huge cash transactions tho somehow. its clearly a difficult topic but its also the source of a lot of the worlds corruption and misery.
- 3y ago
zrn900 3y ago
Not only those - majority shareholders must always be mentioned when any company is being talked about for any reason. Shareholders should not be able to hide behind a smoke curtain while profiting from destructive corporations. Every company must be named along with its majority shareholders before its ceo.
HeartStrings 3y ago
Can we now get a guide how to fully obfuscate ownership of shell companies?
karol 3y ago
Don't burn other people's shell companies - start your own.
dsign 3y ago
I see lots of people wanting to go after shell companies here, and with good reasons. But if you live in a country where the state takes away 65% of the money the employer sets apart to pay you, and then your means are precariously sufficient to live in a small one-room apartment and you struggle to sustain an elderly parent who doesn't receive any support whatsoever from that same state that takes your money away for "social security" ... Yeah, then you start looking for "shells". This is the financial equivalent of the cherished right of Americans to have guns.
- Mashimo 3y ago
  What country is that?
  - adrian_b 3y ago
    Many countries have total taxes much over 50% of the revenue for most people, frequently in the range from 60% to 70%, even if this is not at all obvious because the total amount of taxes is obfuscated by splitting them in many parts that are paid by distinct entities, e.g. the employer, the employee and the merchants (VAT or sales taxes), plus property taxes, medical taxes and so on.
    - Mashimo 3y ago
      Yes, for example the country I live in. But elderly also get support. And if you have lower income, the tax is also less. The question was in what country do you have to combination of the above. High income tax for low earners and low social security for elderly. And he is also implying that it's worth to create a shell companies for a single person. Which AFAIK also cost money.
- sealeck 3y ago
  How do shell corporations help you avoid paying income tax? Most countries now require employers to deduct this tax at source, so it's very hard to get out of it. Of course there are things you can try (e.g. your employer loans you money and then uses an offshore employee benefit trust to repay the loan) but tax authorities tend to come down quite hard on this.
nullserver 3y ago
I knew a company where they had cookie data for ads. They were able to figure out how tons of companies were related from that. Company A would own a bunch of other companies. But certain people would be common to all of them. Creating connections.
trollbridge 3y ago
In several U.S. states (Wyoming, Ohio, and others), the ownership information of an LLC is never registered with the state at all. The only information is: #1, someone who filed the formation paperwork, which can literally be anyone. #2, a registered agent who will receive mail or an in-person courier deliver for the LLC so it can be sued. This service can be also be provided by literally anyone. If fees are exchanged for #1 or #2, the payor might be an owner but that’s not guaranteed and the provider doesn’t have to disclose that either. Actual ownership will be on documents the LLC owner maintains custody of and which can be kept private. They only become relevant if the LLC is sued and ownership is part of the question of the lawsuit. Even then, the LLC can be represented by attorneys who may keep the owner’s identity entirely private.
victor22 3y ago
Where's fucking blackrock and freaking vanguard real owners at, thats the QUADRILLION dollar question
peter_d_sherman 3y ago
Related: On the same website, there is also apparently the following article: "Following the Money, from Laundromats to Central Banks" (by Laura Oliver, September 25, 2023): https://gijn.org/stories/following-the-money-from-laundromats-to-central-banks/ https://gijn.org/stories/following-the-money-from-laundromat... Potentially related: Wikipedia article on Monetary Policy: https://en.wikipedia.org/wiki/Monetary_policy https://en.wikipedia.org/wiki/Monetary_policy
anamax 2y ago
One use of shell companies is to protect "not US" businesses from the US govt. The US Govt asserts jurisdiction over companies that do business with US entities, even if said companies don't do business in the US. As a result, many "not US" companies won't do business with US entities. One solution involves a shell company outside the US set up by a US entity. That shell company then does business with the "not US" company on behalf of said US entity. This is not a scheme to evade any law. Like any other company, the shell company is responsible obeying the laws of the country where it is based as well as the laws applicable to dealing with the "not US" company. Similarly, the US entity is responsible for obeying all applicable laws wrt its dealings with the shell company. Yes, the US govt can go after the shell company but that doesn't reach the "not US" company.

1068 points by chippy 3y ago

deleted 3y ago

[deleted]

I don't even know why shell companies and companies with secret ownership are even allowed. Well, I mean we all know the real reason: because it benefits rich people and they make the rules. But, what would a politician disingenuously cite as the public interest aligned justification for having these entities? Are there legitimate non-nefarious uses?

ebiester 3y ago
Game theory: Any country can do it, and the company in which the corporation is registered is not going to suffer. So what is their incentive not to allow it?
- dartos 3y ago
  Ideally it should be votes, but that doesn’t really work out like you’d want :(
mkmk 3y ago
I'm not very familiar with shell companies, so I'm curious – why isn't this just a matter of privacy for those involved? I'm generally pretty understanding of pro-privacy-oriented behavior.
- arrosenberg 3y ago
  Oligarchs using transnational legal arbitrage to avoid paying taxes isn't a matter of privacy.
  - tensor 3y ago
    Nor is it due to the existence of shell companies. Rather it's due to poor enforcement and loopholes in tax law. You also don't need to make any of the information public to enforce it anymore than it's required to make your personal earning information public to enforce you paying taxes.
    - arrosenberg 3y ago
      It's hard to take that position seriously. The people using the loopholes are the ones that pushed to put them in the law and degraded enforcement budgets. One hand washes the other and it takes place in the dark. Let's put a little sunshine on it and see what happens. We might find some very interesting networks exist...
- itopaloglu83 3y ago
  I don’t know any other case where someone can own an entity like a house, car, estate, etc. where they get to hide who benefits from it.
  - toomuchtodo 3y ago
    You can hide ownership in real estate using land trusts in states that support them. You can fund an LLC with a vehicle to hide ownership of the vehicle by VIN or plate search. In both cases, startup costs are a few hundred dollars, and ~$100-200/year upkeep per asset. Trusts in general are simply good estate planning compared to probate costs, at least on the topic of real estate holdings and titling.
    - mcguire 3y ago
      Those are essentially shell companies.
      - deleted 3y ago
        [deleted]
    - ensignavenger 3y ago
      New Mexico has fairly decent LLC privacy and you don't have to pay an annual fee to upkeep your LLC at all. Just need to have a registered agent, which can be had for under 100/year.
      - toomuchtodo 3y ago
        Appreciate the info!
    - itopaloglu83 3y ago
      Could you elaborate on reasons to do so? Using LLC to limit liability makes sense, but I’m not familiar with hiding identity behind a corporation.
- micromacrofoot 3y ago
  because it's a lot easier to have privacy when you're rich the default for normal people is for all of this data to be public unless you can either navigate bureaucracy (costs time and money) or pay someone to do it for you (costs money)
- digging 3y ago
  I'm quite big on privacy rights for indibviduals but I also feel that when corporate wealth (thus, influence on culture and politics) reaches a certain scale, radical levels of transparency become very important for the health of our society. For an extreme example, the public deserved (and still does) to know who were the individuals at Shell devising a decades-long misinformation campaign about climate change -- and that the bullshit they were hearing about climate change being fake was driven by nothing but greed. To address inevitable replies: No, I don't know exactly where the line is (or lines are - it should probably be a tiered system), and I recognize defining those lines is itself a position of immense power. Those are solvable problems though and don't make the idea bad. (It could still be a bad idea, but for other reasons.)
- truckerbill 3y ago
  It's about the usage. No single dogma ever makes sense without context. These are abused by many to hide taxable wealth. It's in the public interest to understand what very powerful people are doing , because the public are usually getting the short end of the stick- this should override any ideology regarding 'privacy', 'freedom' and other fuzzy words (not that some interpretation of these things isn't also important)
- ensignavenger 3y ago
  It is very much a matter of privacy for most folks doing it. And you don't have to particularly be rich to benefit from it.
- Veserv 3y ago
  Not all are bad, but they are frequently abused to not only protect privacy, but to protect against legitimate legal need. It is like hiring a contractor on your house who gives you a false name so they can skip out of town when you figure out they cheated you. There is no legitimate purpose for that degree of privacy. They wanted privacy for the express purpose of providing you no legal recourse. Pseudonymity is perfectly valid, but there needs to be efficient, effective, and crystal clear means to pierce it and find the actual humans making the decisions with intent when there is a legitimate and well-supported legal need.
  - ensignavenger 3y ago
    Can you cite any research on just how frequent you mean by "frequently". It certainly happens sometimes, but I have found no evidence that is is the norm.
    - Veserv 3y ago
      Why does that matter? I said that pseudonymity is perfectly fine, there just needs to be a straightforward and effective means of piercing it when there are legitimate legal purposes. Are you arguing that because it is not a majority of cases that they should be impervious even if there are legitimate legal purposes? There are enough high profile cases of shell corporations being used for unsavory and explicitly illegal behavior, to the extent that it is literally a meme, such as the crimes unveiled in the Panama Papers [1] that simple and robust mechanisms to prevent abuse are warranted even if abuse is uncommon. It is not like being able to pierce the privacy with a court order is even some new mechanism, you can already do that, it is just expensive, time-consuming, and difficult if they fight. [1] https://en.wikipedia.org/wiki/Panama_Papers https://en.wikipedia.org/wiki/Panama_Papers
      - ensignavenger 3y ago
        The cost of providing such mechanisms and properly securing them against abuse have to be weighed against the benefit. In order to know the benefit, we need to know the size of the problem we are seeking to solve, and whether or not the proposed system would actually solve the problem. So yes, knowing the size of the problem matters a lot, and is a good first step to running a cost benefit analysis.
tensor 3y ago
Yes, privacy. Corporations are often used for trusts and investments. I wouldn't call those nefarious at all, though yes they are mostly only useful for more wealthy individuals. These structures all still pay taxes and are 100% legal. Arguments about tax law being good or bad are really a separate issue, and those should be addressed directly by updating the law, not erasing privacy for wealthy. As much as the wealthy rightly get shit on for various things, they are still entitled to the same rights as everyone else.
- lostlogin 3y ago
  > they are still entitled to the same rights as everyone else. Has there ever been a time when the wealthy had less rights than the poor? The speeding ticket fine which is charged as a percentage of ones wage comes to mind. https://www.theguardian.com/world/2023/jun/06/finnish-businessman-hit-with-121000-speeding-fine https://www.theguardian.com/world/2023/jun/06/finnish-busine...
  - vlovich123 3y ago
    That’s not really less rights though. That’s like saying the rich have fewer rights under progressive taxation. And no, generally the more rich and/or powerful you are the more rights society provides you. Even countries which strive for more equality simply try to shore up the most egregious instances but there’s always a difference. That’s because not all rights matter equally to everyone. For example, rich and poor both don’t have the right to sleep on a park bench but in practice that right is only particularly relevant to one party.
  - sdeframond 3y ago
    Do you mean that fining more for richer people is unfair? That's an interesting view. One could argue that a flat fine allows rich people to break the law more, because they can afford it. Which IMHO seems pretty unfair.
    - lostlogin 3y ago
      I agree with it and think there should be more penalties like it.
CPLX 3y ago
Not every corporation is some wealthy shadow network. The owners of an abortion clinic, or a store that sells fur coats, or a therapy practice for the criminally mentally ill, all might have good reasons why they’d like additional privacy.
- atomicfiredoll 3y ago
  It could also be a programmer who is within their legal right to start their own company, but who doesn't want their current employer harassing or singling them out for it. Further common situations involve trying to keep details out of the public record because they can be abused by bad actors; ones who may be looking to spam you, engage in a frivolous lawsuit, or personally harass you/your family. At least these are some of the scenarios mentioned by companies that do asset protection. Edit: In regards to harassment, think about the abuse retail, fast food, or other customer-facing employees endure for perceived slights. It feels easy to understand why average small business owners would want privacy and to keep things in legal channels. Personally, I think the government knowing who's in charge (Corporate Transparency Act) is a good halfway point, but it's not unrealistic to be concerned about leaks or abuse with that system.
tetromino_ 3y ago
As a working class individual, you can get excellent financial privacy. You can stick your $10k in savings in cash in a glass jar behind your bed, and neither the government nor big banks nor investigative journalists get to know how much is in thar jar, and they have no say what you spend that money on and when. A more wealthy individual has no such privacy. Their wealth is not truly wealth and not truly theirs, it is fundamentally a trust-us IOU from a bank or a stockbroker which is shared with all kinds of parties, a publicly visible number on the screen which at any second could turn zero or negative on the orders of a corrupt official or due to a buggy algorithm or mistyped name on a sanctions list. The more wealthy individual yearns for a glass jar - but no jar is big enough to hold the sums the more wealthy individual operates with. Hence, shell companies.
- jhp123 3y ago
  The largest glass bottle seems to be 1700L. $1 million is only about 11 liters of $100s. So you could store about $100 million in a glass jar.
  - janalsncm 3y ago
    At 5% inflation $100M loses almost $14000 of purchasing power per day.
JumpCrisscross 3y ago
> Are there legitimate non-nefarious uses? Have you formed an entity? In Delaware it’s file and go. You don’t need a lawyer nor to fill out a bunch of paperwork. That’s efficient. Where we demand disclosure is when that entity touches money through the banking system.

tiahura 3y ago

[flagged]

none_to_remain 3y ago
I guess some people have "privacy" and others have "secrecy".
deleted 3y ago
[deleted]

nick7376182 3y ago

I've heard that you can create two LLCs which own each other, and be completely anonymous. This should be possible for regular people to do at a small nominal cost. Not sure if it works in practice!

LoganDark 3y ago
How exactly would you pull that off without having to create an LLC owned by yourself first? This sounds like just something you heard once, I would love to know more if it's actually a thing.
- hackable_sand 3y ago
  Awhile ago I did some lay research to see if I could form a Corp that owns itself. Iirc the legislation actually accounts for recursion. I do not remember if they require the owners to be human though. Either way I was doubly disappointed...
  - LoganDark 3y ago
    > I do not remember if they require the owners to be human though. I don't think there's yet any way for a non-human to count as a legal person. Entirely possible there may never be.
  - BLKNSLVR 3y ago
    Sounds like something in Accelerando.

nocoiner 3y ago

These are great techniques and helpful advice, but note that they are basically of zero use whatsoever in the case of (for instance) a Delaware LLC. The amount of information regarding beneficial ownership that’s out there varies by jurisdiction and entity type - and again, these tips are great ways to dig into those and quite likely come up with some interesting findings in a lot of cases - but in most cases a Delaware LLC is basically a black box.

jgalt212 3y ago
very true, but you can glean some clues regarding any entities that came before the Delaware LLC, or another state LLC that has a similar name, or does transactions with the Delaware LLC. Or you can search on those you think may be involved with the Delaware target. Their names often show up in other less opaque filings. So, you man not find the smoking gun, but you can sure gin up a lot of smoke.
- nocoiner 3y ago
  For sure. By way of further example, if you’re looking into land owned by an LLC (or other entity), the LLC had to be conveyed that land at some point - searching the county grantor/grantee index of deeds will turn up who owned the land before and may be suggestive as to who owns the LLC (or maybe not - maybe ownership of the LLC was conveyed instead of the real property interests specifically to avoid showing up in the county records - it’s a fun puzzle).
- lsllc 3y ago
  In fact many states require LLCs created in other states to register as a foreign entity if they do any business in that state (incl. having a presence there). For example in Massachusetts [0]: Pursuant to M.G.L. Chapter 156C, §48, a foreign limited liability company doing business in the Commonwealth must submit to the Corporations Division within ten days after it commences doing business in the Commonwealth, an application for registration as a foreign limited liability company ... So even if you form your LLC in Delaware, if you live/work/conduct business in Mass, then you must also register there -- it costs $500/yr and the statute requires that a non-trivial amount of information about the company be supplied including the names/addresses of "managers" for the entity as well as the registered agent. I don't know what the privacy laws for foreign entities in registered in MA are (if any), but I suspect not the same as say Delaware. If you have a footprint in more than one state, you may be required to file as a foreign entity in multiple states. [0] https://www.sec.state.ma.us/divisions/corporations/filing-by-subject/limited-liability/corporations-foreign-limited-liability-company.htm https://www.sec.state.ma.us/divisions/corporations/filing-by...

jeffbee 3y ago

Get the filings for the shell company from secretaries of state. Search for other entities that have the same mailing addresses. Search local records for construction permits, zoning applications, business licenses and suchlike concerning the same addresses. These cross-checks have worked well for me in the past.

nocoiner 3y ago
These are extremely good tips. The value of the address of the entity may be marginal (a lot of times, the address listed on the formation paperwork is the address of a registered agent services company, which may handle thousands and thousands of unrelated companies) but searching other databases for the name of the entity (paying close attention to spelling and abbreviation - though often, this gets flubbed in other filings) or the person who formed it can turn up some interesting connections.
deleted 3y ago
[deleted]

spxneo 3y ago

this area is super murky with legitimate use cases for shell companies. im wondering why this is an area that hasn't been solved by eager engineers. seem like there is a large gap to fill for people needing turnkey IBCs but one problem might be using offshore data centres. I often see advertisements for incorporating offshore but there is no legitimate way to know which are authentic and which are just skimming on top of what you can do by yourself. It's quite fascinating enough that I need to hire a CFO or someone specifically familiar with IBCs

snarf21 3y ago
Genuinely curious: What are the legitimate use cases for shell companies that hide who owns them?
- IncreasePosts 3y ago
  Public figure who doesn't want randos knowing where their house is. Non-public or public figure who doesn't want their name associated with certain business activities that they partake in.
  - dheera 3y ago
    Or even non-public figure not wanting randos knowing where their house is. I'm not a public figure and I don't want where I sleep posted all over the internet. I don't have the budget for security if some Twitter fool decides to give me a death threat because of a comment.
    - deadbabe 3y ago
      If someone really wants to know where you live, they will find you. If the information in your bio is actually yours, there’s already plenty to work with. :)
      - rrr_oh_man 3y ago
        A lock is not to keep out bad guys who want to get in, but to keep good guys honest. Same with privacy. Why not install a camera on your toilet while we’re at it? Or do you have something to hide?

clamprecht 3y ago

I see no comments so far about the Corporate Transparency Act[1] and how it affects privacy with LLCs, etc. The US government will soon have a database of all (complying) beneficial owners. This database will eventually be hacked, leaked, shared with local law enforcement (further allowing it to be leaked). How will the "rich people" maintain privacy/secrecy after the Corporate Transparency Act? [1] https://www.uschamber.com/co/start/strategy/small-business-corporate-transparency-act https://www.uschamber.com/co/start/strategy/small-business-c...

yieldcrv 3y ago
It was immediately challenged as soon as citizens could get standing this year A judge ruled it unconstitutional - narrowly only for the organizations and their members that filed the case - and its currently being appealed by the US gov its going to the 5th circuit though so rich people don't have to do anything, this regulation is DOA its interesting what cases make headline news and whats relegated to law journals
- cj 3y ago
  > its interesting what cases make headline news and whats relegated to law journals It certainly made headlines to people its impacts. 2 of my law firms sent out alerts. (They send out alerts maybe 1-2 per year whenever a significant legal change is happening - I think the last alert was the Wayfair sales tax Supreme Court decision)
  - yieldcrv 3y ago
    yeah I filed a flurry of anonymous LLCs via intermediaries via my lawyer at the end of last year since the new law initially only affects business entities created on or after Jan 1 2024, and older ones starting to need reporting just in Jan 2025 I took one look at the law and figured that I won’t have to do it by 2025 because it’ll get declared unconstitutional so far my bingo board is working out
arminiusreturns 3y ago
Rich people get out of it because all their main hidey-holes (Banking, Insurance, etc) are exempted.

kmod 3y ago

I think it's fascinating that when the topic is "shell companies" that the HN discourse is essentially "if they have nothing to hide then they don't need secrecy". I think that if the article were about linking "tor users" with their secret owners then we would see the opposite stance being taken. I'm not taking a position here, and I'm not saying even that these stances are necessarily contradictory, but just that the blanket argument "X shouldn't get to be secret because I don't think they have a legitimate reason" doesn't differentiate between these two cases.

tgv 3y ago
Companies aren’t people.
- BadHumans 3y ago
  I'm people. I had a secret LLC I was doing contracting out of because I didn't want my companies'address out there easily. My companies' address being my house.
  - and0 3y ago
    I also have an LLC for software and didn't love having to put my address, since I don't have a storefront or anything either, but I don't think it reveals any more info than someone could find from having your name in the first place.
  - czbond 3y ago
    In the future, you can proxy the address via a registered agent.
  - nickpp 3y ago
    When I set up my LLC I used all available ways to protect my name and address. No reason really, but I guess growing up hearing my grandparents stories about the communist take-over of our country taught me what happens when you are a target because you are publicly linked to your wealth.
  - 3y ago

golergka 3y ago

Both encryption and shell companies are technologies to achieve privacy, and both are sometimes abused by bad actors. It's very sad to see commenters here fail applying the same principle to both.

joshstrange 3y ago
Honest question: What are some examples of legitimate uses of shell companies? I don't know enough about this to know "good" cases, I'm only aware of some bad ones. I can come up with tons of "encryption" good/bad examples but I'm coming up blank on good shell companies.
- VMG 3y ago
  Evading stalkers or organized crime. The state cannot always help
- balderdash 3y ago
  Taxes (normal tax minimization), regulatory compliance (need a local company), liability protection (wall off specific risks), financial liability management (e.g. opco vs holdco debt), etc.
- golergka 3y ago
  > Honest question: What are some examples of legitimate uses of shell companies? I have an answer to that, but instead of going down this route, I want to ask you: do you want to defend you right for privacy by coming up with uses that other people would find "legitimate"? Or do you want the right for privacy by default, without having to defend yourself in such a way?
BLKNSLVR 3y ago
> It's very sad to see commenters here fail applying the same principle to both. I don't think the two are comparable, and just applying "are technologies to achieve privacy, and both are sometimes abused by bad actors" to both as if that's the start and end of the discussion is surprisingly dismissive. The 'scope' of encryption is fairly limited in comparison to the scope of a company that can operate under the directorship of a person or persons who are entirely protected from any legal responsibility for the actions of said company. I may be blinded by personal bias, but I just don't see but the most marginal comparison of these two concepts.

agys 3y ago

Not shell companies but made me remember They Rule…! https://theyrule.net https://theyrule.net

bluerooibos 3y ago
Jesus. Perhaps showing my ignorance but I'm surprised by the amount of overlap these board members have across major companies.
- tristor 3y ago
  They Rule is outdated, but the unfortunate truth is that there's been even more consolidation since it first went online. This is partly due to the consolidation of liquidity through institutional investors. It's one of the consequences of passive investment strategies being dominant among retail investors.
- bozhark 3y ago
  Companies, state dept., politicians, revolving door
- ensignavenger 3y ago
  Some of these people are investors or represent investor groups. As such, the group they represent will own stakes in multiple companies, and often have board seats on many of the companies. Others will be an top executive at one company, and also serve on the board as an advisor of a few other, non-competing companies (usually non-competing). Those are probably the most common scenarios where some one would serve on multiple boards.
  - poorlyknit 3y ago
    Does that change anything though?
    - ensignavenger 3y ago
      I am not sure what the concern is in the first place, so I am not sure if it changes anything or not. I was just adding my own perspective on the situation.

Joel_Mckay 3y ago

Double blind trusts are specifically designed to keep those in control of the assets isolated from public scrutiny and taxes. The fact the News cycle quickly forgot about who the Panama Papers exposed... proved there is a deeper cultural issue in North America. This has been going on for over a century, and it is foolish to think one could stop someone's full-time job hiding wealth. =)

NotYourLawyer 3y ago
> Double blind trusts That’s not a thing.
- Joel_Mckay 3y ago
  I can see how you might believe that... One should get a well paying job in Monaco.
  - NotYourLawyer 3y ago
    Eh I have a US-centric view. Maybe that term means something in Monaco.
    - Joel_Mckay 3y ago
      Many boards were controlled by US proxies at one time. Perhaps things are more transparent now, but I doubt it... =) Only posers build a private bank in the Cayman islands.

jmyeet 3y ago

An awful lot of tax evasion could be solved with just two things: 1. Clear beneficial ownership of any company; and 2. Taxing at source when the beneficial ownership isn't clear. This particularly applies to real estate. Two of the biggest tax havens now are the US and the UK. The US requires all sorts of financial disclosures from other countries but doesn't reciprocate. The UK (London in particular) seems to exist solely to allow billionaires from sanctioned countries to launder money through real estate. Like that's the entire business model.

p1necone 3y ago

Can someone do this with userbenchmark? I'm dying to know what unhinged maniac runs that site.

Stagnant 3y ago
There is no mention of any company name on userbenchmark's site so there is nothing to search. I guess not selling anything and not accepting donations helps to keep the owner private.

beryilma 3y ago

Shell companies, in a sense, have been used to evade local laws and ordinances, even by semi-public institutions. IIRC, Harvard University, for example, used LLCs and law firms to buy land secretly in Brighton and Cambridge, MA against the policies of local governments. It would be good to know the real institutions behind such transactions...

bozhark 3y ago
If they can get around it, it’s not against policies. Policies need to change

patrakov 3y ago

The https://opencorporates.com/ https://opencorporates.com/ site is also useful for finding companies registered using a stolen identity or a fake address that matches yours. In the past, I was a victim of some bad guys registering a shell company using my address in a not-yet-built house. I reported that to the tax officers back then.

JumpinJack_Cash 3y ago

YCombinator accepts Cayman Islands LTDs and LLCs too IIRC. It's not always about dirty deals of trafficking substances and arms, it's honestly desirable for a corporation to be located in a tax neutral jurisdiction and then the various owners can vote with their feet where to locate themselves according to their individual preferences. The inevitability of death and the fact that you can't take money with you (and also the fact that people accostumed to a certain lifestyle would find their life pretty lacking in a 0% tax country) would compel the aforementioned owners to cash out and start spending at some time and then non-0% tax countries would get their fair share tax on their capital gains, income as well as consumption. If a guy never cashes out and never spends, then what can you do? They are just monodimensional, obsessed individuals, perhaps heavily on the spectrum too, that's their tax right there, not a monetary tax but still a huge tax and a heavy burden that they "paid" throughout their lifetime.

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tomrod 3y ago
> that's their tax right there, not a monetary tax That's not how taxation works.
heroprotagonist 3y ago
> perhaps heavily on the spectrum too That's not how autism works.
wizzwizz4 3y ago
> They are just monodimensional, That's not how linear algebra works.

atum47 3y ago

Funny. I did a job interview once that covered basically this. Building a full stack app that would track the other companies of a given billionaire. Looking back at it, I did a bunch of code challenges crazy like that.

Projectiboga 3y ago

There is a new national law for all corps to have their beneficial owners disclosed to the Department of the Treasury by the end of 2024, and all new firms within 30 days.

kazinator 3y ago
Probably backed by those who benefited from it, as another way to to screw young up-and-comers.
- readyman 3y ago
  any anyone who understands how capitalism works would understand this will never change under capitalism
  - syklep 3y ago
    Why call it capitalism as opposed to a free market? 'Capital' stands for money but the 'market' pressure is why these dark patterns emerge.
    - kazinator 3y ago
      Because it's not a free market with those with deep pockets manipulate the rules that get enshrined into law.
      - autoexec 3y ago
        Which means there can never be a free market since there will always be people able to bribe and manipulate in order to get their way. It doesn't matter how much oversight and transparency you have, those things can be slowly chipped away overtime and replaced with laws that favor the ultra rich at the expense of everyone else. I'd love to be wrong about that, but I've never seen an example of a country where wealth had no power to influence law.
        2y ago

mihaitodor 3y ago

This podcast interview with Brooke Harrington gave me some good insights into how people manage offshore wealth: https://www.preposterousuniverse.com/podcast/2023/05/22/237-brooke-harrington-on-offshore-wealth-as-a-complex-system/ https://www.preposterousuniverse.com/podcast/2023/05/22/237-...

djaouen 3y ago

I was going to post something “low content”, but instead, I will say: please donate to the ICIJ[1] and/or the OCCRP [2] if you have the funds! [1] https://www.icij.org/ https://www.icij.org/ [2] https://www.occrp.org/en https://www.occrp.org/en

pksebben 3y ago
Forgive my ignorance, but could you expound a little on what makes these institutions important? Like, why do you consider them trustworthy and what specific good do they provide?
- djaouen 3y ago
  They are the first two organizations referenced in the article. :)

LAC-Tech 3y ago

I'm much more concerned about the naked corporate lobbying that occurs in every "democracy" on earth than I am shell companies.

Linda231 3y ago

[dead]

Havoc 3y ago

Colour me unimpressed. It's mostly picking up info from the regulators in the various jurisdictions. Glorified alternate UI frontend to public info basically. That's not nearly enough to untangle what's going on in complicated multi-jurisdiction structures - even for structures not designed to conceal. To put it into terms hn will understand - it's the equivalent of claiming to deduce how software works from the source code filenames only. I mean yeah kinda, but not really. Also, article is missing WorldCheck.

indus 3y ago

Isn’t all of the data available to the government especially in the US via federal banking system? Every dollar transaction in the world is reported back to banks in Wall St.

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Animats 3y ago

Now this would be a good LLM application - something that can query all those sources and dig until the actual owner appears.

balderdash 3y ago

I find it ironic in an interesting way that on HN there is such a strong privacy bent generally, but on the topic of financial privacy it seems to be the reverse

Staple_Diet 3y ago
There's a marked difference between an individual's right to privacy and that of a business. Shell companies are financial instruments designed to obfuscate ownership, usually for tax evasion purposes. Therefore increased transparency is, for the most part, in the public's interest.
- balderdash 3y ago
  Why is it in the public interest to know who owns a company? Sure for specific groups of people, transparency is in order (elected politicians etc.) but wouldn’t financial disclosure laws work better? Why isn’t it the general public’s prerogative to know that I own 5% of a shell company (LLC) set up specially for the purpose of pooling an investment in a new venture? shell companies are just companies, suppose the vast majority of which are formed for perfectly normal reasons,
  - taway789aaa6 3y ago
    "Corporations are people too, my friend." If they can have "free speech" and are "legal persons" then the public _surely_ has an interest in knowing who is benefiting (the ultimate beneficial owner) from that corporation's actions.
- IG_Semmelweiss 3y ago
  The founding fathers published anonymously to obfuscate ownership of their penmanship. Would it be in the public interest that their identities were revealed and the lot be killed by the King ?
- diego_sandoval 3y ago
  It's in the public interest only because of the particular way that taxes work. If sleeping with someone was a taxable event, would that mean that it's OK to spy on people's bedrooms? After all, it's in the public interest. In principle, I think that taxing only land ownership and pollution is the theoretically fair way to do taxation. And land ownership doesn't require obtaining any data that isn't necessarily known by the government in the first place.

BLKNSLVR 3y ago

"Shell corporations are companies that don’t actually do any business" This, I think, is a fairly key differentiator between valid and invalid use of incorporation. If a company doesn't do any business, then it shall not have a right to exist as it has no reason to exist, as the reason companies exist is to do business. One may argue there are other reasons a company may exist, but I'd argue those reasons only exist as an unintended consequence of the ability to exist as 'shields' or 'cut-outs' as discovered by those familiar with the peculiarities of international law and accounting/finance.

aelhaji 3y ago
No, that statement is a subjective assessment. Any company, including shell companies, will have business activity on paper. In other words, there are invoices, financing or a combination. This is why it’s difficult to define shell companies. A more realistic proxy is to look at the ratio of employed people by the particular entity to revenue or some other financial metric. Most shell companies don’t have many employees while the financial figures might be huge. Again, this might be a bona fide structure as part of an international holding but at least you have an objective filter as a starting point.
- boringg 3y ago
  Hasn't there been a lot of talk about AI enabling the 1 person billion dollar company recently?
- lIIllIIllIIllII 3y ago
  This isn't my area but I feel like they might be kind of easy to define. They're wrappers around their inner companies. I'm sure nothing has been done because pretty much every corpo lobbyist represents a company that uses them.
  - adgjlsfhk1 3y ago
    the problem here is that most companies are wrappers around inner companies.

globalnode 3y ago

financial privacy is the way you get corruption - i dont care if you dont want anyone to know you spent a bazillion dollars on your yacht, too bad. companies especially dont deserve special consideration in this respect. as a community we could expose corruption and greed at the highest levels if financial privacy ceased to be a thing. edit: ofc this is what the whole article is about, ive calmed down and read it now :D... still, dont know why these things are allowed to go on

hackernewds 3y ago
soooo no crypto?
- globalnode 3y ago
  crypto currency? afaik thats not private but trackable. crypto for general privacy? sure, we have a right to communicate in private what i dont like is financial privacy
  - travoc 3y ago
    Put your money where your mouth is and publish all of your bank and credit card statements.
    - globalnode 3y ago
      banks have all this info - its already published to 3rd parties via rewards schemes and tbh i wouldnt be surprised if the banks sell it as well. retailers resell it... none of this data is private. in effect i am publishing it already. but as you say, i would gladly have it all posted online for anybody to see if it meant financial transparency for all. edit: perhaps i wouldnt like my bank balance published... that may make some individuals targets. in thinking about it perhaps i would prefer financial "transaction" transparency. then we would have to guard against huge cash transactions tho somehow. its clearly a difficult topic but its also the source of a lot of the worlds corruption and misery.
3y ago

zrn900 3y ago

Not only those - majority shareholders must always be mentioned when any company is being talked about for any reason. Shareholders should not be able to hide behind a smoke curtain while profiting from destructive corporations. Every company must be named along with its majority shareholders before its ceo.

HeartStrings 3y ago

Can we now get a guide how to fully obfuscate ownership of shell companies?

karol 3y ago

Don't burn other people's shell companies - start your own.

dsign 3y ago

I see lots of people wanting to go after shell companies here, and with good reasons. But if you live in a country where the state takes away 65% of the money the employer sets apart to pay you, and then your means are precariously sufficient to live in a small one-room apartment and you struggle to sustain an elderly parent who doesn't receive any support whatsoever from that same state that takes your money away for "social security" ... Yeah, then you start looking for "shells". This is the financial equivalent of the cherished right of Americans to have guns.

Mashimo 3y ago
What country is that?
- adrian_b 3y ago
  Many countries have total taxes much over 50% of the revenue for most people, frequently in the range from 60% to 70%, even if this is not at all obvious because the total amount of taxes is obfuscated by splitting them in many parts that are paid by distinct entities, e.g. the employer, the employee and the merchants (VAT or sales taxes), plus property taxes, medical taxes and so on.
  - Mashimo 3y ago
    Yes, for example the country I live in. But elderly also get support. And if you have lower income, the tax is also less. The question was in what country do you have to combination of the above. High income tax for low earners and low social security for elderly. And he is also implying that it's worth to create a shell companies for a single person. Which AFAIK also cost money.
sealeck 3y ago
How do shell corporations help you avoid paying income tax? Most countries now require employers to deduct this tax at source, so it's very hard to get out of it. Of course there are things you can try (e.g. your employer loans you money and then uses an offshore employee benefit trust to repay the loan) but tax authorities tend to come down quite hard on this.

nullserver 3y ago

I knew a company where they had cookie data for ads. They were able to figure out how tons of companies were related from that. Company A would own a bunch of other companies. But certain people would be common to all of them. Creating connections.

trollbridge 3y ago

In several U.S. states (Wyoming, Ohio, and others), the ownership information of an LLC is never registered with the state at all. The only information is: #1, someone who filed the formation paperwork, which can literally be anyone. #2, a registered agent who will receive mail or an in-person courier deliver for the LLC so it can be sued. This service can be also be provided by literally anyone. If fees are exchanged for #1 or #2, the payor might be an owner but that’s not guaranteed and the provider doesn’t have to disclose that either. Actual ownership will be on documents the LLC owner maintains custody of and which can be kept private. They only become relevant if the LLC is sued and ownership is part of the question of the lawsuit. Even then, the LLC can be represented by attorneys who may keep the owner’s identity entirely private.

victor22 3y ago

Where's fucking blackrock and freaking vanguard real owners at, thats the QUADRILLION dollar question

peter_d_sherman 3y ago

Related: On the same website, there is also apparently the following article: "Following the Money, from Laundromats to Central Banks" (by Laura Oliver, September 25, 2023): https://gijn.org/stories/following-the-money-from-laundromats-to-central-banks/ https://gijn.org/stories/following-the-money-from-laundromat... Potentially related: Wikipedia article on Monetary Policy: https://en.wikipedia.org/wiki/Monetary_policy https://en.wikipedia.org/wiki/Monetary_policy

anamax 2y ago

One use of shell companies is to protect "not US" businesses from the US govt. The US Govt asserts jurisdiction over companies that do business with US entities, even if said companies don't do business in the US. As a result, many "not US" companies won't do business with US entities. One solution involves a shell company outside the US set up by a US entity. That shell company then does business with the "not US" company on behalf of said US entity. This is not a scheme to evade any law. Like any other company, the shell company is responsible obeying the laws of the country where it is based as well as the laws applicable to dealing with the "not US" company. Similarly, the US entity is responsible for obeying all applicable laws wrt its dealings with the shell company. Yes, the US govt can go after the shell company but that doesn't reach the "not US" company.