FRANKFORT, Ky. (LEX 18) – Attorney General Andy Beshear announced he joined a bipartisan group of 24 other attorneys general in support of changes in federal law that would make it tougher for criminals to secretly launder money through shell corporations.
In a letter sent to the leadership of the House Financial Services Committee, Beshear urges the advancement of legislation that would improve transparency of shell corporations by requiring them to disclose who controls and profits from their activities.
Beshear said the legislation is needed because opioid, human trafficking and other criminal investigations can stall when the identity of the individuals who control or profit from shell companies is hidden.
A shell corporation is defined as an inactive company used as a vehicle for various financial maneuvers or kept dormant for future use in some other capacity.
According to a report released earlier this year by Polaris, an organization that works to eradicate human trafficking worldwide, current law in the U.S. allows trafficking operations like illicit massage parlors to conceal their beneficial owners, and “flourish in secrecy, shielding traffickers from law enforcement and prosecution.” Polaris estimated more than 9,000 parlors operate nationwide, with nearly $2.5 billion in earnings.
A 2016 report by Washington, D.C.-based consumer group Fair Share details cases where opioid trafficking was connected to shell companies. The report describes drug cartels’ use of shell corporations to launder profits by investing in numerous ventures.
