The reason - according to the author - is federalism.
- Click here for the article.
How US states became masters of the shell game
The biggest single provider of anonymous shell corporations in the world isn’t Panama or the Cayman Islands. It’s not the financial secrecy stalwart Switzerland, or a traditional offshore haven like the Bahamas.
It’s Delaware. And the main reason is federalism.
Thanks to the US’s federal structure, company formation remains overseen at the state level, rather than in Washington.
So if you’re a budding autocrat interested in a bit of easy money laundering, you don’t turn to federal officials in Washington. Instead, you look to state officials in Dover, Cheyenne, or Reno to help construct anonymous shell companies to funnel and clean your illegitimate money.
And these states have taken full advantage. Since there are no regulations in the US requiring that shell companies identify their true owners — known as “beneficial owners” – American states have been under no compunction to try to peel back who may be behind the anonymous shell companies mushrooming across the country.
These states and their constituents are raking in fees — at last check, Delaware made some $1.3 billion annually from its company formation industry — so whenever, say, a human trafficker or extremist network sets up an anonymous company in Wilmington or Laramie or Carson City, they have little incentive to try to figure out who may be behind the companies.
