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Incorporating the Illicit: Assessing the Market Supply of Shelf Companies

Whilst inherently lawful, shelf companies enable the generation of contrived financial structures and arrangements that can facilitate actors to organise their criminal activities and conceal, convert, or control their illicit finances or assets. A stratified market for the ...

Published onJul 11, 2024
Incorporating the Illicit: Assessing the Market Supply of Shelf Companies
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Abstract

Whilst inherently lawful, shelf companies enable the generation of contrived financial structures and arrangements that can facilitate actors to organise their criminal activities and conceal, convert, or control their illicit finances or assets. A stratified market for the purchase and management of such legal structures exists. At the lower end, greater accessibility to shelf companies is enabled by websites offering shell companies, or ready-to-go corporate vehicles, at various prices to anyone interested in setting up a company quickly in a preferred jurisdiction. Although these products have been considered as high-turnover and low-cost, their importance should not be underestimated. They lower barriers to entry to customers interested in concealing, controlling, and/or converting illicit finances domestically and transnationally. To gain insight into the nature and organisation of this market, this article provides a first overview of the online market for shelf companies by empirically analysing data scraped online that identified 296 online shelf company suppliers. The results highlight how some of shelf company suppliers are positioned in a way that is conducive to the facilitation of illicit activities; that there exist a diverse range of suppliers with varying sizes, scopes, and connections; and that the market is global, with a large variety of shelf company jurisdictions provided by suppliers.

Keywords

Shelf companies, money laundering, online markets, company formation agents

INTRODUCTION

‘Shelf companies’ (or ‘ready-made’ companies) refer to aged companies that can be bought for a specified price. ‘Shell companies’, on the other hand, are business entities with no significant assets or ongoing business. Hence, shelf companies are shell companies until they are bought, and then, depending on how the buyers use them, they may remain shell companies or be used for real economic activities. Shelf companies can be purchased online at various prices and with varying features by anyone interested in obtaining a company quickly in a preferred jurisdiction without having to go through the company-formation process themselves.

In the pre-internet-connected era, the pre-registration and sale of limited companies by intermediaries significantly expedited business activities by allowing buyers to circumvent the then paper-based, lengthy formation process and to avoid having applications for company formation rejected, and this was conducive to business. Since company formation moved online, and although anyone can now straightforwardly form a company within minutes, a significant online market in the trade of shelf companies has emerged, but little is known about the structure and dynamics of this market. Online suppliers of shelf companies, often referred to as ‘company formation agents’ (CFAs), form a central part of this online, global, and stratified market that is characterised by a diverse array of agents, products, and services (Lord, Campbell and Wingerde, 2019). This market has widened access and lowered barriers to entry into the global financial system and, whilst the market is inherently lawful, it can be attractive to actors interested in creating contrived financial structures and arrangements conducive to organising their illicit behaviours (from criminal to unethical) and to concealing, controlling, and/or converting illicit finances and assets domestically and transnationally.

For instance, in 2023 The Bureau of Investigative Journalism published a report on the ways in which shell companies enable so-called ‘pig-butchering’ crypto scams (The Bureau of Investigative Journalism, 2023). In these cases, victims are targeted, groomed, and ‘fattened’, such as via romance scams, before being deceived into investing funds in fake cryptocurrency investment websites owned by shell companies once ostensible trust has been established by the offenders. The investigation identified a list of 168 UK-registered companies running these frauds and registered to UK addresses (140 in London) that acted as mailboxes, rather than company premises, or registered at residential addresses where the residents had no knowledge of the companies. Victims used these companies’ UK-registered status to rationalise their investments as this provided a ‘sham credibility’, but the invested funds were then stolen. In the same vein, Canadian illicit massage parlours -often related to sex trafficking- were also found to use such companies to launder illicit profits (The Globe and Mail, 2023). These cases reinforce the centrality of such companies to the transnational organisation of myriad serious crimes for financial gain, from the activities of organised crime groups and criminal enterprises to white-collar and corporate crimes (see Lord et al, 2019). However, whilst we know this market exists and enables serious crimes for gain to endure and remain profitable, as Lord et al. (2019: 1234) argue, further research into the market is needed ‘to understand shifts in business in response to controls and preferences, and into the entry costs and processes for different actors’, particularly in relation to market supply, demand, competition, and regulation.

It is this context that led to the main objective of this study into the dynamics of supply within the online market for company formation as we set out to understand the market supply behind the sale of shelf companies. More specifically, our research focused on the following three subobjectives:

  1. To determine the extent of the market, with focus on the provision of shelf companies and associated services.

  2. To better understand the reach of such suppliers by measuring their relative size in terms of online popularity and service specialisation/diversification.

  3. To map and visualise the interconnections of suppliers, incorporating a network analysis of these relations.

In addressing these objectives, this study provides a first overview of the extent of the market supply behind the sale of shelf companies and generates new insights into the functioning and network of the market. The article is organised as follows: First, we review the literature on the (mis)use of shelf companies in the organisation of crime. Second, we present our data sources and methodological approach, demonstrating how we identified 296 online shelf company suppliers and gathered, automatically and manually, key information on them, such as the services they offer and where they are based. Third, we discuss our core findings relating to the shelf company market.

Our contribution is threefold: (1) we present an interesting methodological approach and analytic strategy for scraping data from the web to gain insights into corresponding market dynamics and features (arguing this is a replicable and potentially repeatable approach to generating longitudinal insights over time to understand market change); (2) we provide original, empirical data and insights into the nature and organisation of this online, global market addressing a knowledge gap relating to the structure and functioning of the market; and (3), we find that the market is more concentrated than at first sight, as suppliers are linked and form networks of international suppliers.

BACKGROUND AND CONTEXT

There is an emerging literature analysing the role of shelf/shell companies in the organisation of illicit financial flows, alongside attention on the intermediaries and formation agents that make this market function, acting as creators, sellers and managers over time of the companies and related services. For instance, World Bank data and analysis on 150 grand corruption cases indicate that the vast majority used a ‘corporate vehicle’ (in all cases a company or corporation) to hide the money trail (funds in bank accounts) and that, where ownership data was available, these shell companies were established or managed by professional intermediaries (Van der Does de Willebois et al. 2011). As an example, Lord, Wingerde and Campbell (2018) analysed the misuse of shell companies in the BAE Systems transnational bribery scandal, in which such vehicles were created in jurisdictions such as the British Virgin Islands (BVIs) in order to divert more than £135m via the shell companies of third-party intermediaries (using Swiss bank accounts) to bribe public officials in Saudi Arabia and beyond. The benefits of such structures and arrangements to BAE were that they enabled the company to (i) conceal its marketing advisor relationships, (ii) create obstacles for investigating authorities, (iii) circumvent laws prohibiting these relationships, and (iv) to assist advisers in avoiding tax liabilities for payments from BAE (Lord et al., 2018: 7). Scholars of organised crime have also drawn attention to how these groups and networks use these companies to launder the proceeds of crimes, to generate income, to avoid personal liability, or to legitimise other activities (van de Bunt et al., 2007; Ruggiero, 2017), or how lawful assets and finances may be directed towards the funding of criminal activities (Zabyelina, 2015). Notable examples of these contrived, international laundering schemes include the so-called ‘Russian Laundromat’ that involved the laundering of at least US$20bn (and even up to US$80bn) generated from criminal enterprise in Russia and moved via other jurisdictions, including Moldova, the UK, and other countries, allowing the beneficial owners to retain control over the funds (see Campbell and Lord, 2020, for discussion of the shell companies involved in these artificial structures). Attention has also been placed on the use of shell companies to organise the finances generated for, and from, corporate financial crimes, making use of the same features that are attractive to organised criminals (Lord et al., 2018). For example, in analysing the tax fraud and money laundering case of Dutch textile company Jansen BV, Lord et al. (2018: 8-9) foreground the misuse of shell companies created in jurisdictions with notable confidentiality provisions, such as the Dutch Antilles, to create fabricated invoices and transactions to defraud tax systems and then manage the illegally generated funds for seemingly legitimate purposes. In these terms, the analysis of shell companies as part of the modus operandi of serious crimes for gain represents an analytically useful way of breaking down artificial categorical distinctions between the concepts of organised crime and white-collar/corporate crime, and instead focusing on the shared commissioning aspects of these crimes.

The key point is that actors implicated in criminal or unlawful behaviours may need to conceal their finances and assets from government authorities and/or may seek to exploit legal differences across jurisdictions when it comes to tax laws, amongst other reasons, and shell companies can aid this. For instance, as Reuter notes, there are generally five major sources of ‘illicit’ finance - bribery, tax evasion, criminal enterprise earnings, corporate profit shifting, and currency regulation evasion - and one key channel for moving the finances is via the use of shell companies (see Reuter, 2017). Legal structures, such as shell companies, provide features that individuals cannot possess as natural, rather than legal, persons. For example, shell companies have been evidenced to provide (1) an ‘ostensible legitimacy’, that is, an illusion of lawful and reputable business, and (2) effective anonymity and insulation, as the beneficial owners of these companies remain obscure and legally separated from the entity (Lord et al., 2018). The opacity of, and/or anomalies with, such company ownership structures and arrangements have been evidenced to correspond to an increased likelihood that a company and its beneficial owners might be involved in illicit activities, including money laundering (Jofre et al., 2021). Interestingly, countries receiving better evaluation scores from the FATF on the transparency of beneficial ownership have been evidenced to also have higher corporate opacity values (Riccardi, 2022; Riccardi and Carenzo, 2023).

As established, the creation and management of the shell companies are undertaken by third-party intermediaries, often referred to as trust and company service providers (TCSPs) or company formation agents (CFA) (Lord et al., 2018). Once illicit finances are moved into and via shell companies, the money becomes effectively untraceable (Sharman, 2010; Findley et al., 2013; Johannesen and Zucman, 2014). In these terms, the appearance of lawful commercial activities represents an interesting vehicle for managing and concealing the finances generated for, and from, varied serious crimes for financial gain. Furthermore, there is a preference amongst those looking to create opaque company ownership structures to direct their illicit finance to more stable and peaceful countries, whilst higher levels of corruption in a country correlate with a lower number of anomalous ownership structures, suggesting rational actors prefer to direct their funds towards reputable jurisdictions with high secrecy levels (Aziani, Ferwerda and Riccardi, 2021).

A stratified market for the purchase and management of shell and shelf companies has been identified (Lord et al., 2019). As Lord et al. (2019) demonstrate, at the premium end of the market, exclusive law and accountancy firms, or company formation agents, provide assistance to high-net-worth individuals and groups, creating and managing shell companies on their behalf – this segment of the market is difficult to access if you are not within the ‘global elite’. At the economy end of the market, greater accessibility is enabled by online company formation agents and service providers, who provide an online service for anyone, anywhere, to pay a (relatively small) sum to purchase companies. In all cases, shelf companies registered in varied jurisdictions can be purchased, and local management services specific to these jurisdictions can be provided, including the setting up of bank accounts for these corporate entities without proof of individual identities – this is a core, necessary requirement to be able to move finances via these entities (van de Bunt et al., 2007; Sharman, 2010). Earlier research looked into company formation services and money laundering and/or illicit finance. Sharman (2010) set out to establish whether it was possible to form anonymous corporate vehicles without having to provide proof of identity before then opening bank accounts for those vehicles, and Findley et al. (2013; 2014) undertook a randomised field experiment to assess levels of compliance with international standards by company formation services. Whilst highly insightful, these studies have a key caveat: they provide insights into only stranger interactions rather than those more secretive, long-term interpersonal relations. That said, gaining access to company formation insiders to understand their choices is highly challenging for researchers. Nevertheless, from a trust or reliance perspective, stranger interactions are still of significance, as some level of trust in these providers on the part of criminals is needed, and this level of trust is likely to vary depending on the nature of the relationship between the formation agent and the purchaser, whether this remains at arms-length via the internet in the economy market, or more personal at the premium end (see also Levi, 2015, on trust and laundering).

The use of shell and shelf companies is a central feature of the global financial system and market-based economies, with large flows of finance being managed globally through these vehicles. The market and use of such companies ‘to hide the origins of investments or to conceal beneficial ownership of property [is] legitimate’ (Nelen 2008: 755), and the role of professional ‘wealth managers’ in ensuring this endures, is common (see Harrington, 2016). However, the ease of entry into the market for unscrupulous actors and the willingness, or wilful blindness, of agents to circumvent compliance requirements (see Sharman, 2010; Findley et al., 2013) and/or an absence of capable guardians within a fragmented regulatory and legal environment globally (see Sharman, 2010; Campbell, 2018) provide conditions for other people’s dirty money to be managed through such processes and systems. This means that anyone, whether organised crime groups, professional money launderers, or white-collar criminals, and others, can straightforwardly, and at low cost, set up legal structures to enable illicit activities and conceal their identity whilst part of contrived multi-jurisdictional arrangements. Lord et al. (2019: 1233)’s research demonstrates ‘the misappropriation of otherwise legal markets and constructs as facilitators of crime, and reinforces, as with much white-collar, corporate and organised crime scholarship, the ambiguities that exist within legitimate spheres, the blurred interfaces between the licit and illicit, and the social harms that can arise from otherwise lawful financial structures and arrangements’.

More specifically, many third-party company formation agents offer on their websites so-called ‘shelf companies’, or ready-to-go corporate vehicles, at various prices (determined by the company features, e.g., history of VAT payments in a reputable jurisdiction) to anyone interested in setting up a company quickly in a preferred jurisdiction (Lord et al., 2019). These are also sometimes referred to as ‘aged companies’ as they have been preregistered before subsequent sale and so have aged – this could be months or years. The ‘aged’ nature of these ‘shelf’ companies can be a desired feature as i. it removes the need to go through the company formation process oneself, ii. it provides an immediate company history (particularly if there is associated paperwork, such as VAT records) which may be needed to circumvent legal requirements in some countries, such as when aiming to access particular industries or sectors, or can be beneficial to present an artificial appearance of business operations over time, and iii. the KYC and identification verification requirements of purchasing an already created company can be less burdensome than incorporating a new company, allowing criminals to retain greater control over their personal details. The added features and age tend to increase the purchase costs. Although these products have been considered as high-turnover and low-cost, their importance should not be underestimated. They lower barriers to entry to customers interested in concealing, controlling, and/or converting illicit finances domestically and transnationally and have demonstrably been used in the organisation of varied white-collar and organisational crimes. They are advertised online and can be bought within a few clicks.

This online supply for the sale of shelf companies is an area that requires better understanding as it has yet to be rigorously uncovered and analysed beyond qualitative analyses and anecdotal evidence. Such examination will allow a better understanding of the market supply size, its organisation, and the importance of the different suppliers involved. It is this challenge that we seek to address in this article.

METHODOLOGY

The section below presents the data collection process. Then, the methods used to analyse the data are outlined, followed by an overview of the identified suppliers in terms of the jurisdictions in which they are established and the languages they offer on their website. A final section outlines the limits of the data collection and processing.

Data Collection

The data collection is divided into three sub-sections. The first section outlines how online shelf company suppliers were identified. The second section explains the manual data collection, and the third section explains the automated data collection. The manual and automated data collections were conducted on suppliers’ websites to gather sufficient information to achieve the three objectives mentioned above.

Sample creation on online shelf company suppliers

To find websites selling shelf companies, we used the Google Custom Search API. We conducted searches over two weekdays in March 2023. We developed a list of 52 individual queries related to the sale of shelf companies, such as “buy shelf companies” or “buy ready-made companies”. The list is available in Annex 1. Note that the API is restricted to 10 results per query and 100 queries per day. Over these two weekdays, we used two user accounts and launched the list of individual queries, which led to finding 2,744 individual results. We manually investigated the websites, and 2,448 results were either false positives (such as websites selling shelves or news articles), or were duplicates (the complete URL was different, but the main domain was the same). Removing false positives and duplicates led to finding 296 websites explicitly advertising the sale of shelf companies.

Manual data collection on shelf company suppliers

Data was manually collected on these 296 websites. To do so, the team first visited twenty websites and developed a preliminary coding sheet. Then the task of filling up the coding sheet was given to two coders. During the coding process, the coders met eight times to compare their results. During these meetings, some discrepancies in their respective interpretations led to changes in the coding rules, which improved the preciseness of the data collected. Moreover, in terms of coder agreement, note that both filled the coding sheet for the 296 websites, and they went over each instance of coded information together to pinpoint any discrepancy. Hence, the final data was validated and agreed upon by both, thus increasing the reliability and validity of the data collected.

Table 1 below presents the information manually gathered by the two coders. Block A includes prices, years of incorporation and jurisdictions mentioned in suppliers’ advertisements. Note that jurisdictions were collected according to international standard ISO 3166, which includes names of countries, dependent territories, and special areas of geographical interest (International Organisation for Standardisation (ISO), n.d.). Block B includes information on additional services provided by suppliers: company formation, after-sale management, nominee services and the opening of bank accounts. Block C includes information on suppliers: the language(s) available on the website, the advertised country of origin, and any advertised phone number(s) or email address(es) as well as the provided payment methods.

Table 1 – Information manually collected on websites (N=296) 

Variable

Description

Bloc A:

Advertisements information

Advertised year of incorporation

  • Year of incorporation advertised in listings (list)

Advertised Prices

  • Advertised prices for shelf companies. The prices were converted in USD based on the exchange rate of the currency on July 1st 2023 (list)

Jurisdictions on sale

  • The jurisdictions in which the incorporation services are offered (list)

Bloc B:

Additional services offered

Company formation

  • Offers company formation service (1/0)

After sale management

  • Offers to manage “something” after the transaction, including virtual offices, forwarding post/mails, accepting phone calls, corporate secretarial services, and human resources administration services. Each service was coded as a string in the dataset (string)

Nominee services

  • Offers the possibility of appointing a director or a nominee to the purchased company on the behalf of the client (1/0)

Bank accounts

  • Offers bank accounts (1/0)

Bloc C: Suppliers’ information

Language

  • Website’s language (string)

Home jurisdiction

  • Address of correspondence (string)

Email(s) 

  • All emails listed (list)

Phone number(s)

  • All phone numbers listed (list)

Payment methods

  • The type of payment method offered by the supplier (list)

Automated data collection on shelf company suppliers

To link websites together, we also automatically collected information on the websites’ internet protocol (IP) address and the registered entity of the Secure Sockets Layer (SSL) certificate using the socket Python library. Website IP addresses represent the unique numerical address of the server where the website is hosted. On the other hand, an SSL certificate constitutes a website’s identity and its credentials for encrypting internet traffic, ensuring that the data exchanged between the server and its users remain private and secure. The registered entity (registrant) is thus the entity to which the SSL certificate was issued. To avoid any false positives, any registered entity under a generic organisation, such as “sni.cloudflaressl.com”, was removed from the dataset.

Finally, to assess the popularity of these websites, the Tranco list was used (Tranco, n.d.). Tranco is a list of the top most visited websites based on internet traffic data, ranking up to 10 million websites. A website with the first rank is the most visited website on the internet while a website with a rank in millions is considered less visited. A website not being featured on the list means that the website is not among the top million visited websites. This list is maintained by researchers who aggregate data from well-known lists to reduce the biases and instabilities from these individual lists (e.g., Cisco Umbrella, Farsight, Quantcast, and Majestic). According to the Tranco website, the list has been maintained and updated almost every day since 2018. The list can also vary greatly on a daily basis due to the different methods used by aggregators as well as internet traffic manipulation (e.g., robot traffic) (Le Pochat, Van Goethem and Joosen, 2019; Le Pochat et al., 2018). To counter such instabilities, the Tranco list was downloaded five times, on the first Monday of February, March, April, May, and June of 2023 (two months prior to and two months after the data collection) and the ranks of the 296 websites, when available, were extracted. Only suppliers that featured in all the downloaded lists were kept and their mean rank (over the five extracted lists) was computed. A supplier that featured steadily on this list from February to June 2023 is thus considered among the top million websites visited.

Methods

We use descriptive statistics as well as network analysis to answer the three research objectives and, subsequently, understand the market supply behind the sale of shelf companies, as explained below.

Descriptive Statistics

Some of the objectives are achieved by computing descriptive statistics on the information manually collected. Specifically, Objective 1 aims at uncovering what products and services are offered and their distribution across suppliers. To achieve this objective, the distribution of variables in Blocks A and B of Table 1 are presented and discussed in the results section.

Objective 2 aims to determine the relative size of suppliers in terms of online popularity and service specialisation/diversification. To assess shelf supplier online popularity, we use the daily Tranco list. A supplier with a website featured in the list is assumed to have a large reach, as the website is among the million most visited websites. Keeping only shelf company websites that featured steadily in the Tranco list over time (five months), as explained above, allows their mean rank to be calculated. In short, such mean rank represents a proxy for the popularity of the website.

In terms of diversification, two measures are developed. First, a variable that captures the proportion of suppliers offering one, two, three, four, or five of the services, namely, sale of shelf companies, company formation, after-sale management, nominee services and bank accounts, is calculated, and its distribution is reported in the results. Suppliers offering more services are assumed to have a larger size and scope than others offering only the sale of shelf companies, for example.

Second, the number of jurisdictions offered by a supplier is calculated. Suppliers offering shelf companies across many jurisdictions are assumed to have a larger size and scope, as they offer cross-border services. To visualise this, we also present a network of suppliers and the jurisdictions in which they offer their services, as explained below.

Network Analysis

To achieve part of Objective 2 and Objective 3, we use network analysis. Network analysis maps the relationships (i.e., edges) between entities (i.e., nodes). It seeks to understand the structure of the network and the patterns of interaction within it (Borgatti et al., 2009). Such a method has been widely used in criminology to understand the flows and patterns within illicit networks (Morselli, 2009). In the context of this study, network analysis is used to map jurisdictions and suppliers together, as well as to map suppliers together.

Network on Jurisdictions and Suppliers

To understand how diverse suppliers are in terms of jurisdictions offered for the sale of shelf companies, a network that maps jurisdictions with suppliers is created. This network also shows, alternatively, which jurisdictions are most offered by suppliers.

Network Linking Suppliers Based on Identifiers

The third objective of this study is to depict whether suppliers are interconnected. To connect suppliers, we used four identifiers: (1) advertised emails, (2) advertised phone numbers, (3) IP addresses, and (4) SSL certificates registrants. This implies that two suppliers advertising the same phone number, or the same emails, are assumed to be connected, just like two suppliers sharing the same IP address or the same SSL certificate registrant (considering we removed any ‘standard’ SSL registrants, as explained above). Also, note that we assume that two websites hosted on the same IP address are likely connected. However, given that website hosting services may host many websites on various services for a fee, this assumption may create false positives. We argue that the likeliness that the websites of two suppliers in the dataset were ‘by chance’ hosted on the same IP address is low. Instead, discovering that multiple suppliers’ websites are hosted on the same IP address is indicative of a connection between them that should not be underestimated. Hence, to uncover the potential hidden structure of the market, a network is created which includes these four identifiers and the suppliers. The identified connections are then qualitatively analysed by visiting the websites and are discussed in the results section.

Sample Overview

To provide an idea on the types of websites collected, Figure 1 presents the top 15 jurisdictions where suppliers claim to be established, according to their address(es) of correspondence available on the website as well as the top 15 languages offered by them. This information was manually coded, as shown in Block C of Table 1. Note that some suppliers may have advertised more than one address and therefore more than one attached jurisdiction as well as more than one language.

Figure 1 – Top 15 Jurisdictions where suppliers are established based on the address on their website (a), and language provided on their website (b).

As shown in Figure 1 (a), the suppliers identified are based all over the world, as over 90 jurisdictions are found in the sample. The most common jurisdictions are the UK (16%), the US (13%), Poland (7%), Hong Kong (7%) and Germany (5%). Figure 1 (b) shows the languages offered on the supplier’s websites. Since the keywords for the searches were written in English, English is found in 100% of the suppliers. Obviously, conducting searches in another language could have yielded other suppliers. However, the sample still contains some of these suppliers as Russian is prominent, representing 21% of websites, Spanish (18%), French (17%), German (16%) and Polish (11%). Note that over 114 distinct languages were found in the sample, illustrating that suppliers offer their services in a variety of languages beyond English. Given this variety of languages, and English being an international business language, we argue that the sample is representative enough to draw interesting conclusions on the market but recognise there may be non-English language websites that specialise in providing services to other countries only (e.g., Russian-language websites that offer Russian-only website content).

Limitations

The method used to provide a first overview of the market supply for the sale of shelf companies is not without limitations. To begin, a key caveat of focusing on the online market is that we only access one segment of the company formation market, much of which may take place via other legal firms or businesses that do not advertise their services openly online, instead servicing pre-existing clientele, and that we only gain insight into stranger interactions. Also, the sample creation is driven by Google search API, which relies on proprietary search engine optimisation algorithms. The searches were also conducted only with English keywords. Further research should look into other APIs, other techniques, as well as other languages to capture additional websites. The data collection for the sample creation was also conducted over only two days. Conducting the collection over many months could yield additional results that were not found due to the limited time. In fact, conducting the research over several months or years could also show how the supply changes over time, investigating whether there is a high turnover in suppliers and/or whether the products and services they offer change over time. The manual data collection was also driven by the sample, therefore not capturing other products or services that could be offered by suppliers outside the sample. In the same vein, we could assess only suppliers’ advertised products and services. We inferred that if a product or a service was not available on the website, then the suppliers did not offer that product or service. However, the supplier may offer the product or service without advertising it on the website. These limits mean that the results may overlook additional products or services provided by shelf company suppliers as well as underestimate how many suppliers offer them.

Without confirming through manual investigations, linking suppliers through identifiers (advertised emails, advertised phone numbers, IP addresses, and SSL certificates registrants) may yield false positives. For example, suppliers may use the same call centre. We did manually confirm that the linked websites displayed similarities, but future research should look into these connections further to better understand how and why these websites are connected.

Finally, it is possible that not all the websites we identified are legitimate in that some may have been created entirely for criminal purposes, although we consider the risk low. For instance, websites could be used for fraud to deceive consumers into paying for products or services that do not exist. Similarly, some websites may be created to obtain personal information (e.g., by providing unsecure links or requesting personal data) to enable other frauds (e.g., credit card frauds), or may be fronts to present an appearance of legitimacy to enable laundering for those who control the website. That said, those websites that score highly on the Tranco rating are likely to provide legitimate services, otherwise consumers would likely have reported suspicions. Further research on the business operations of each website would be needed to verify their trustworthiness and reliability.

RESULTS

The study’s results are presented below, starting with an overview of the sale of shelf companies and related services. Subsequently, the size and scope of suppliers are discussed. The interconnectedness of these suppliers is then presented, leading to the discovery of the underlying structure within the shelf company supply.

The Sale of Shelf Companies and their Surrounding Services

On these websites, shelf companies are promoted as a faster way to start business, arguing that, since the company has already been created and has a track record, it has more credibility and thus provides easy access to loans, leasing agreements, or markets that require companies to have a history. Precisely, on suppliers’ websites, advertisements offered shelf companies both with and without prices. Indeed, suppliers named the prices for some of the shelf companies but not for all or mentioned that they had more companies to offer on enquiry. In fact, half of the sample (146 out of 296) advertised no price and rather asked to be contacted to discuss such matters. The other half (150 out of 296) offered a price for shelf companies on their websites through advertisements. Specifically, we found 22,146 advertisements and 9,447 advertisements included prices.

These prices ranged from US$35 to US$8.5 million for a single shelf company. On average, companies were sold at a price of US$9,589 with a standard deviation of US$151,382, illustrating a highly skewed distribution. This is because only 8% (788 out of 9,447 advertisements with prices) of companies were offered at a price above US$10,000 and 50% of companies were advertised at US$1,200. Figure 2a) below presents the distribution of prices, with all prices above US$10,000 removed. Hence, we see that most prices range from a few hundred US dollars to US$2,000. Note that the price of a shelf company may differ depending on the type of company sold (e.g., limited liability company or public liability company), its age, and the jurisdiction it is attached to, to name a few of the characteristics that may determine a price. Further research should be conducted on the prices, considering these variables. Also, note that at the skewed end of the pricing structure, it seems implausible that any actor would purchase a shelf company for a price of US$8.5m, but, speculatively, this might offer a route or scheme to laundering vast amounts of money.

Also, for the shelf companies on sale, we found that 19,046 (out of 22,146 advertisements) were advertised with the year of incorporation. The years spanned 1902 to 2023, but only 0.8% (154 out of 19,046) of shelf companies were incorporated prior to 2000. This means that 99.2% (18,892 out of 19,046) of shelf companies were incorporated between 2000 and 2023. Figure 2b) shows the distribution of companies based on their year of incorporation for those incorporated after 2000. We can see that 88% (16,801 out of 19,046) of shelf companies were, in fact, incorporated past 2015.

Figure 2 – Distribution of prices and years of incorporation in shelf suppliers’ advertisements. For visualisation purposes, Fig 2a) does not contain prices above US$10,000 and Fig 2b) does not contain years of incorporation below 2000.

Information was collected on other services provided by suppliers. Table 2 shows the distribution of such services across the sample.

Table 2 – Distribution of Services related to Shelf Company Sale Among Suppliers (N=296)

Company

Formation

After Sale Management

Nominee Services

Bank

Accounts

79%

(N=234)

80%

(N=238)

32%

(N=96)

60%

(N=177)

Beyond the sale of shelf companies, 79% (234 out of 296 suppliers) of suppliers also offered company formation services (i.e., helping in the creation of a new company). This may be because the ‘expertise’ or required knowledge and skillset for creating shelf companies is the same as that required to form new companies. Beyond these two economic activities (i.e., company formation and the sale of shelf companies), 80% (238 out of 296) of suppliers offered after-sale management of shelf companies; such services are explored below. A total of 32% (96 out of 296) offered nominee services, which refers to appointing third-party individuals or entities to act as the directors or shareholders of a company. Most of the time, suppliers that offered this service mentioned that the provided director or shareholder resides in the jurisdiction where the shelf company is registered. Finally, 60% (177 out of 296) of providers offered the possibility of opening a bank account in another jurisdiction.

Table 3 After-sale management main services (N=238)

Virtual office

Mail forwarding

Registered office/address

Phone call services

Meeting rooms

Corporate Secretarial services

Fax forwarding

HR services

81%

(N=192)

69%

(N=163)

52%

(N=123)

47%

(N=112)

34%

(N=81)

29%

(N=70)

23%

(N=54)

11%

(N=25)

As mentioned above, a total of 238 suppliers offered after-sale management, including a wide array of related services. As shown in Table 3, of these 238 suppliers (and among the most common after-sale management services), 81% included virtual offices (192 out of 238 suppliers), 69% mail forwarding (163 out of 238), 52% registered office/address (123 out of 238), 47% phone call services (112 out of 238), 34% meeting rooms (81 out of 238), 29% corporate secretarial services (70 out of 238), 23% fax forwarding (54 out of 238), and 11% human resource services (25 out of 238). Some services are more sophisticated than others. For example, a virtual office provides customers with a local address in a foreign jurisdiction, which can be used as a professional address. Most of the time this service is offered with other services, such as phone call services or fax and mail forwarding services. Corporate secretarial services, on the other hand, encompasses taking care of a company’s legal requirements, such as keeping and managing legal documents, drafting minutes of meetings, filing annual returns, and managing corporate changes such as the company name or address changes as well as changes in the board of directors and shareholders. We do not go over each service, as such an exercise is beyond the scope of this study.

In terms of payment method, most suppliers asked to be contacted for further details. As shown in Table 4, only 23% (67 out of 296) offered payment in credit or debit, 10% (29 out of 296 suppliers) offered PayPal, 9% (26 out of 296) offered bank transfers, 6% (17 out of 296) offered cryptocurrency payments -and specifically Bitcoin-, and 4% (11 out of 296) accepted cash. That 6% mentioned they accepted cryptocurrency payment is interesting, as such payments could be considered a more confidential means of payment, along with cash. Notably, moreover, 18% (53 out of 296) of suppliers offered the possibility of opening a cryptocurrency company, illustrating that there might be a market niche for shelf company suppliers to target companies or individuals dealing in cryptocurrency.

Table 4 – Payment Means (N=296)

Credit or Debit

Paypal

Bank transfer

Cryptocurrency

Cash

23%

(N=67)

10%

(N=29)

9%

(N=26)

6%

(N=17)

4%

(N=11)

The Size and Scope of Shelf Company Suppliers

In this study, the sizes and scopes of shelf company suppliers were investigated based on suppliers’ online popularity, the number of services offered, and the number of jurisdictions in which shelf companies are offered. These three measures provide an idea of the extent to which the shelf company suppliers have a high reach.

In terms of online popularity, at the time of the data collection, 14% of suppliers (40 out of 296 suppliers) had a Tranco rank over the five extracted lists, which means that they featured steadily in the top million visited websites over the period of study. This result shows that 86% of the suppliers are not among the top visited websites in the world. To assess how popular those who featured in the list were, we calculated their mean rank. As shown in Figure 3, the topmost visited supplier had a mean rank of 266,873. A total of 25% of suppliers had a mean rank below 715,137, while 50% had a mean rank below 1,265,535 and 75% had a mean rank below 1,768,283. The lowest recorded mean rank in the sample is 2,936,252. Note that none of these suppliers are expected to rank at the top of the lists, as they do not service an entire population like search engines or social networks. Hence, a rank in the hundreds of thousands or millions should be considered significant, especially considering that these suppliers are specialised in selling shelf companies and other similar services. They therefore respond to a market niche that does not correspond to the entire population. The results thus show that at least 14% of suppliers scored among the top million websites even though they are specialised in providing a niche service. Hence, these suppliers’ websites are visited by, likely, interested customers only or mainly.

Figure 3Suppliers’ Online Popularity based on Tranco Rank

Out of the 296 suppliers, 40 had a stable Tranco Rank (meaning that they featured every month, from February to June 2023, in the list) and 256 did not. The figure below shows the Tranco Rank for these 40 suppliers.

In terms of service diversification, five services are considered: offering shelf companies, company formation services, after-sale management, nominee services, and bank accounts. When aggregated, 5% (15 out of 296 suppliers) of suppliers offered only one service, 16% (46 out of 296) offered two services, 24% (71 out of 296) offered at least three services, 33% (99 out of 296) of suppliers offered four services, and 22% (65 out of 296) offered five services. This means that 79% of suppliers offered three or more services, thus diversifying their lines of services into additional add-on services surrounding the sale of shelf companies. Whilst we see diversity in these granular, micro-level terms, the varied services offered are all closely related and are services commonly offered in this sector, and were the level of analysis broadened (e.g., to incorporate other financial services beyond incorporation-related activities), our assessment of specialisation or diversification might change. Thus, we see diversification here in a very specific area of financial services.

Finally, how diversified are suppliers in terms of jurisdictions offered for shelf companies? In brief, jurisdictions were mentioned on the websites of 291 suppliers. From these suppliers, 238 distinct jurisdictions were found. However, note that 66% (192 out of 291 suppliers that mentioned a jurisdiction) of them offered shelf companies registered in a single jurisdiction, 20% (57 out of 291) offered between two and ten jurisdictions, 10% (30 out of 291) between 11 and 50, and 4% (12 out of 291) offered 51 jurisdictions and more. Hence, although most suppliers are diversified in the services offered, a large proportion (66%) of suppliers are specialised, offering shelf companies in only one jurisdiction. This may be due to the barriers to entry into registering shelf companies in many jurisdictions, as each has its own rules regarding registration. To better visualise how jurisdictions and suppliers are connected, we created a network, presented in Figure 4. This network ties jurisdictions to suppliers while illustrating the variety of jurisdictions available in the market.

Figure 4 – Network linking suppliers with jurisdictions.

Small nodes represent suppliers and larger gray nodes represent jurisdictions. The size of gray nodes is based on their in-degree score which shows how many suppliers offer shelf companies in that jurisdiction.

Hence, the network highlights that a lower number of suppliers offered shelf companies in many jurisdictions (center of the network), while a larger number of suppliers offered shelf companies in one or a few jurisdiction (perimeter of the network). Such a finding is also highlighted in the descriptive statistics mentioned above. To complement the network, Figure 5 shows the top 50 jurisdictions in which suppliers offer shelf companies. In short, the top jurisdictions include the UK (70 out of 291 suppliers who mentioned a jurisdiction in their advertisements), the US (70 out of 291), Hong Kong (54 out of 291), Seychelles (50 out of 291), Belize (49 out of 291), British Virgin Islands (48 out of 291), Cyprus (47 out of 291), Poland (45 out of 291), Czech Republic (43 out of 291), Panama (41 out of 291) and Germany (39 out of 291). The results thus show a variety of jurisdictions available, highlighting the global nature of the supply.

Figure 5 – Top jurisdictions in which suppliers offer shelf companies

The Hidden Structure Behind the Supply of Shelf Companies

To assess whether suppliers were connected, we gathered four identifiers as explained in the methodology. Note that a supplier can have more than one identifier, as this supplier may advertise many phone numbers or emails on their website. In total, 33 phone numbers, 25 IP addresses, 10 email addresses and two SSL certificate registrants illustrated connections among suppliers. Suppliers were associated with all identifiers in a network and some identifiers uncovered links among 120 of them. Figure 6 presents suppliers that are connected through identifiers. Coloured nodes represent suppliers while grey and black nodes are identifiers. Grey nodes are identifiers that connect only one supplier and black nodes are identifiers that connect more than one supplier. In short, 20 groups were found, with the largest group accounting for 25 % of all suppliers (75 out of 296 suppliers), followed by a group of six, a group of four, a group of three and 16 groups of two, as shown in Figure 6.

Figure 6– Network linking suppliers with identifiers.

Colored nodes represent suppliers while grey and black nodes are identifiers. Grey nodes are identifiers that only connect one supplier and black nodes are identifiers that connect more than one supplier.

Hence, 41% (120 out of 296 suppliers) of suppliers are linked through an identifier (either an email, a phone number, an SSL certificate, or an IP address). Interestingly, most of these networks represent international networks. Indeed, 85% (17 out of 20 international networks) of networks (group of at least two suppliers) offered shelf companies in more than one jurisdiction and 45% (9 out of 20 international networks offered shelf companies in more than five jurisdictions. At a larger scale, two networks of suppliers offered more than 100 jurisdictions, with one offering 169 individual jurisdictions and another one offering 133 jurisdictions. Such networks of suppliers broaden the scope of shelf company suppliers, giving them an international feature as the shelf companies they offer are cross-border.

One interesting finding relates to our manual investigation of the lower part of the large red component. Indeed, this network of suppliers was formed of websites with the exact same design, created by a turnkey website provider. This provider, dubbed a market facilitator, offered to develop various websites, including websites specialised in the sale of shelf companies. Such an actor lowers the barriers to the creation of shelf company websites. In this case, it allowed the development of dozens of websites offering shelf companies with each website specialised in a jurisdiction.

In the end, however, we cannot say whether these multiple, connected suppliers are owned by the same actor(s) or not. Whilst there are shared identifiers, each website may still be separately owned, but it is plausible that the share of the market is much more concentrated than it otherwise appears from the outside. This requires further investigation.

DISCUSSION

This study provides a first overview of the dynamics of the online market supply behind the sale of shelf companies that we consider to be a significant segment of a larger market within which company formation can take place. The findings lead to discussions centred around three key takeaways: (1) some shelf company suppliers are positioned in a way that is conducive to the facilitation of illicit activities; (2) there exist a diverse range of suppliers with varying sizes, scopes, and connections; and (3) the variety of jurisdictions provided is large, thus highlighting how global the market is. These takeaways are discussed below, uncovering insights on the nature, the structure, and the scope of the market.

Attracting the Illicit Side of the Market Demand

To begin, it is worth noting that the market for shelf companies is inherently lawful: selling such companies is not illegal. For this reason, we need to be careful not to overly criminalise the market in its entirety, or to criminalise those market suppliers offering products and services for lawful (if not always legitimate) purposes. That said, there are several dispositions within the market in relation to its structure and functioning that (re)produce over time conditions that are amenable to actors or organisations engaging in illicit activities. Thus, the functionality of a shelf company can be conducive to misuse by illicit actors, particularly when many un- or poorly-regulated suppliers turn a blind eye to full compliance or understanding of client activities. This has been discussed by several scholars who have highlighted how shelf companies can facilitate the concealment of illicit finances or assets (Aziani et al., 2022; Jofre et al., 2021; Lord et al., 2019; Pacini et al., 2018; Van der Does de Willebois et al., 2011). Whilst many jurisdictions have implemented legislation to require formation agents to carry out due diligence and monitor client usage (and to report their suspicions), the sheer volume of the market makes this impracticable. For instance, in the year 2021-2022 in the UK alone, a total of 753,168 companies were formed and registered at Companies House (Companies House, n.d.). This number, globally, will be substantially greater, reinforcing the challenges in implementing sufficient oversight even for highly scrupulous formation agents, particularly in a fast-paced market where the speed of formation is a key selling point. The functioning of the market also provides useful rationalisations for market actors, enabling them to easily justify the provision of lawful products without fully understanding who their buyers are or what the ultimate intended uses of the companies are.

The results of this study further support that the dynamics of the online shelf company market (e.g., highly accessible to all, multi-jurisdictional scope, insulated formation services for clients requiring separation and discreetness, and so on) as well as the positioning of some shelf company suppliers in a way that is conducive to the facilitation of illicit activities (e.g., offering access to different markets via opaque company structures and arrangements) provide opportunities for criminal and illicit misuse at scale, particularly for the purpose of concealing and controlling illicit assets. These features are present with any given ‘shelf company’, but the phenomenon is further exacerbated when layers upon layers of shelf companies are purchased across multiple jurisdictions via multiple formation agents and entered into contrived ownership structures. Some formation agents are aware that they enable these contrived structures. For example, one supplier’s website mentioned:

The aim is to form a structure that makes a puzzle that is difficult for any third party to solve. In this manner, a client's assets remain concealed from those who might want to find them. Furthermore, if a third party went to the point of trying to go abroad and seize the money, they will face the impossible and incredibly expensive task of having to go from jurisdiction to jurisdiction looking for assets. Very few would attempt this, and most would simply give up. That ensures that a client's money stays where it belongs: in their own hands. [Paraphrased from shelf company supplier website]

Others may be unaware of these contrived structures but attempts at timely due diligence may not be enough, particularly under the pressures to attract business in order to survive and make profit.

In the same vein, given the structure of the market we identified, some suppliers may be aiming to capture a market niche of customers involved in illicit activities, which could represent large sums of illicitly owned money. For example, certain shelf company suppliers offer corporate secretarial services that enable quick and costless changes to a company’s information, such as its legal name or board of directors. This signals that these suppliers are willing to facilitate swift changes, which can be convenient when individuals wish to remain flexible due to the threat of legal or criminal investigations. Similarly, 32% of shelf company suppliers offering nominee services indicate their willingness to assist in the concealment of corporate beneficiaries, which is advantageous for illicit economic activities. However, it is essential to investigate the efficiency of these services, as offering them does not necessarily guarantee their quality. A small proportion of shelf company suppliers also accept cryptocurrency payments, which are not illicit per se. However, considering that the volume of funds laundered using cryptocurrencies reached $24 billion USD in 2022 (Chainalysis, 2022) and approximately 46% of Bitcoin transactions are reported to be illicit in nature (Dupuis and Gleason, 2020; Barone and Masciandaro, 2019), the combination of cryptocurrencies and shelf companies suggests that some suppliers may attempt to attract clients involved in illicit activities.

In sum, the results of this study highlight that some suppliers, as demonstrated in the above excerpt, may aim to capture the illicit side of the market demand by offering various services that are attractive to customers involved in illicit activities. However, we cannot determine what proportion of online suppliers intentionally aim to attract criminal or illicit finances. This requires further in-depth research on each supplier to gain insight into the language used on their websites to explain what their services offer (e.g., as above, reinforcing the features that enable circumvention of third-party scrutiny). Alternatively, some form of mystery shopping methodology to covertly assess the integrity of these websites and their services through interactions with them would provide insights into their intentions (e.g., are they willing to bypass certain identification requirements?). Such further research could attempt to quantify the proportion of such suppliers in the market, providing a range from lower to upper bounds. Moreover, dealing with shelf company providers involved in illicit activities requires some level of trust (Levi, 2015). Therefore, signalling alone may not be sufficient, and additional processes not visible through website analysis may be involved, such as unobserved pre-existing relations among conspirators.

A diverse range of suppliers with varying sizes, scopes, and connections

Moreover, the study by Lord et al. (2019) highlighted the stratification of the market for company formation agents, with online suppliers of shelf companies occupying the lower end of the market. These suppliers offer a cost-effective and efficient option for quickly setting up legal structures across jurisdictions. The results of the online popularity analysis of shelf company suppliers showed that 14% of shelf company suppliers ranked among the top million visited websites, suggesting they attract website traffic and potential customers. Hence, a portion of these suppliers are visited by potential customers. Such suppliers may represent ‘higher end’ or well-established entities, warranting further investigation. Furthermore, conducting a market dominance analysis would provide insights into which suppliers are successful in conducting transactions.

Our study further examined the market supply and identified a diverse range of suppliers with varying sizes, scopes, and connections. Many suppliers offered multiple services (79% offer more than three services) but specialised in a particular jurisdiction (66% of suppliers offer shelf companies in only one jurisdiction). In addition, the study found the presence of international collaborative networks, with one accounting for 25% of all suppliers. This suggests that the market may be more concentrated than at first sight, as suppliers may create specialised websites to attract clients interested in specific jurisdictions while being part of a larger network. This is consistent with the research of Janský, Meinzer and Palanský (2022), who identified that certain secrecy jurisdictions seem to cater for, or more significantly affect, particular regions or countries. For instance, whilst they found the US, Switzerland and the Cayman Islands to be important secrecy jurisdictions for most countries, they also identified that OECD countries tend to face, or be affected by, more secrecy than they supply to other countries, and that ‘the bulk of the secrecy that OECD countries face from non-OECD countries is supplied by OECD's overseas countries and territories, primarily those associated with the United Kingdom’ (Janský et al., 2022: 682-3). Future research should investigate these patterns of specialised suppliers within international collaborative networks, as they may reveal interesting dynamics at play. Similarly, comparing the networks of online suppliers with those of offline suppliers, including analysing the interactions and relations between these varied suppliers would be beneficial. However, assessing the offline market is challenging as whilst some company formation agents exist with known premises and services, many such company formation services can be kept in-house within other professional organisations, such as law firms or accountants, and these may not advertise these services externally. Similar obstacles are encountered when aiming to examine the premium end of the market.

In terms of explaining the concentration of the network, the study also uncovered the existence of a market facilitator in the online market supply for shelf companies that facilitates the creation of websites on-demand. Indeed, part of the larger network was formed of look-alike websites, all created by this market facilitator and interconnected through various identifiers. Hence, by using this service, shelf company suppliers can create many websites selling shelf companies in different jurisdictions. In terms of the other networks identified, these may or may not be controlled by a smaller number of actors, who have constructed multiple outlets for their products and services to present a perception of market competition in order to capture more of the market. Further studies should investigate, however, why such segmentation is of interest to shelf company suppliers. Potentially, this segmentation allows suppliers to capture part of the market demand by appearing ‘specialised’ to one jurisdiction. Further research should explore the additional offerings provided to clients beyond website creation, such as potential business partners and tips for success in the market. Additionally, questions remain regarding the quality of products and services offered by suppliers using the facilitator’s service, as the successful selling of the shelf companies goes beyond having a website, especially given the large number of suppliers in the market.

Global Market: A Large Variety of Jurisdictions Provided

The study’s findings shed light on the globalized nature of the shelf company market, both in terms of supply and demand. Indeed, the wide range of jurisdictions where suppliers are registered reflects the international scope of the supply side. Similarly, the diversity of jurisdictions offered for shelf companies demonstrates the global nature of the demand. The results highlight that developed economies with strong financial markets, also sometimes qualified as onshore jurisdictions, such as the UK and the US, feature first in the supply, along with offshore jurisdictions like Cyprus, Belize, and the British Virgin Islands. This is consistent with other studies analysing the concentration and dispersion of shell companies. For instance, Aliprandi et al.’s (2024) analysis of the number of registered shell companies per capita indicates a high density of incorporation in Europe, North America and Oceania. Interestingly, whilst Aliprandi, Busschots and Oliveira’s (2024:7) analysis ‘reveals extraordinarily high registration rates in recognized tax havens compared to other jurisdictions’, our analysis indicates online suppliers of shell and shelf firms are commonly based in major economic jurisdictions such as the US and UK, and that these same two jurisdictions are the top two locations where shelf companies are offered. This provides insight into the dynamics between the location of shelf company suppliers and the locations where they register those companies. Historically, offshore jurisdictions have been interpreted as tax havens and financial centres usually in the form of small-state islands with disproportionately sized financial sectors (Zucman, 2021; Garcia-Bernardo, Janský and Tørsløv, 2021; Garcia-Bernardo et al., 2017). Hence, it is worth noting that UK and US registered companies offer much scope for obscuring beneficial ownership and illicit wealth, in turn raising analytical questions about problematic conceptual distinctions between onshore and offshore, also highlighted by Godefroy and Lascoumes (2013). Similarly, Janský et al. (2022: 689) argue that a hypocrisy exists on behalf of OECD countries as their controlled secrecy jurisdictions (that is, those small island jurisdictions that were formerly colonialised by countries such as the UK and the Netherlands) use selective resistance mechanisms to avoid providing information more intensely than OECD member states.

Further research should investigate the reasons behind customers’ selecting one jurisdiction over another, depending on the economic activities involved. Understanding these differences would provide valuable insights. Additionally, whether the origin of suppliers modulates the products and services offered might reveal the demand for each country. For example, US suppliers may offer products or services different from UK or Estonian suppliers. Research elsewhere has indicated how there is geographical and sector specialisation with regards offshore financial networks, for example, with the UK acting as a conduit between European countries and former members of the British Empire, or the UK offering specialism in head offices and fund management, and so on (Garcia-Bernardo et al., 2017). In these terms, analyzing the relationship (or lack thereof) between the origins of suppliers and the jurisdictions in which they sell shelf companies may offer insights into the flow of illicit funds across jurisdictions.

For all the discussion of the global nature of the online shell company market, it should be recognised that whilst globalisation offers more opportunities for laundering across borders, criminals may not choose not to do so if they deem it unnecessary. For instance, Riccardi (2022: 129) reminds us of the importance of proximity and that ‘close is beautiful’ for money launderers - of the Italian money laundering cases analysed by Riccardi, just over a third involved laundering domestically only, whilst in nearly two-thirds of cases the laundering involved Italy alongside a foreign jurisdiction. In these terms, for Riccardi, assessments of money laundering ought to foreground why, how and where launderers tend to operate in order to understand the distribution and evolution or money laundering risks.

CONCLUSION

This study analyses the structure and dynamics of the online market for the trade in ‘shelf companies’ and associated services. Specifically, the study provides a first overview of the market supply behind the sale of shelf companies. Based on a sample of 296 websites offering shelf companies, the results highlight that some shelf company suppliers are positioned in a way that is conducive to the facilitation of illicit activities. Indeed, add-on services offered, such as nominee services that conceal beneficial owner(s) of a company or corporate secretarial services that enable quick and costless changes to a company's information, illustrate that some suppliers may be positioned to attract the illicit side of the market demand. The results also show that there exist a diverse range of suppliers with varying sizes, scopes, and connections. Most suppliers offer shelf companies in only one jurisdiction, yet most also offer more than three specialised services related to the sale of shelf companies. A small proportion feature among the top million visited websites. Yet, when investigating the hidden structure in the supply, the study also highlights that there exist international networks of suppliers. Finally, the findings also highlight how global the market is, illustrating a wide variety of jurisdictions offered. Further research should also delve into price dynamics, including variations across suppliers, jurisdictions, and types of companies. Finally, missing from our analysis are insights into the actual formation activities of the suppliers we identified. For instance, whilst we have mapped and visualised the market, we have no data on how many companies have been formed by each of the suppliers we identified. Perhaps some suppliers have no business activities at all. Integrating data on the actual number of companies being formed by different suppliers would provide further analytical insights into the nature of competition within the market. Relatedly, future research may also integrate data on regulatory contexts, interventions, and actions in order to add a further analytical layer to insights into supply, demand, and competition.

STATEMENT AND DECLARATIONS

Funding and/or Conflicts of interests/Competing interests

The authors declare that they have no conflict of interest or competing interests in this work.

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ANNEX

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