At this stage, criminals purposefully create or utilize legal, corporate, or financial structures to obscure who truly owns or controls illicit funds, and where these funds originated. The primary function of these concealment mechanisms is not movement of assets, but rather preparation and secrecy. Adversaries set up entities or legal arrangements that, by design, obscure beneficial ownership through layers of nominee or proxy control. These structures can remain dormant or lightly active for extended periods before they are used to receive illicit transfers. This proactive obscuring significantly hinders AML/CFT investigations by severing obvious links between the criminal actor and the illicit assets. Effective detection requires looking beyond surface-level compliance—toward subtle signs of inconsistent or illogical corporate structuring, suspicious nominee relationships, and deliberate complexity designed to obscure ultimate ownership and control.
Concealment Mechanisms
Techniques Under This Tactic
Shell companies are explicitly created to establish opaque ownership structures, such as nominee directors and fictitious shareholders, designed to hide beneficial ownership and obscure the criminal origins of funds. This is the primary strategic objective of using shell entities.
Criminals exploit the aged corporate profile and pre-existing registration history of shelf companies to obscure beneficial ownership, reduce scrutiny, and conceal illicit proceeds behind an apparently legitimate entity.
Temporary shell companies are established and dissolved rapidly to obscure beneficial ownership and frustrate investigations. By existing only long enough to move illicit funds, they minimize the paper trail, making it harder for authorities to link criminal proceeds to actual controllers.
Multi-jurisdiction corporate formations primarily serve to obscure beneficial ownership behind layered shell entities and trusts, thwarting transparent asset tracing and law enforcement inquiries.
Forging or altering documentation obscures true ownership or fund origination by creating a misleading paper trail.
Falsified cross-border settlement documents obscure the origin of illicit funds behind seemingly legitimate international transactions.
By forging or manipulating digital transaction records (e.g., adjusting balances, fabricating invoices), criminals deliberately prepare to evade AML controls and oversight.
Criminals create fraudulent, sector-specific compliance documents to explicitly mask beneficial ownership and illicit activities behind official-looking regulatory frameworks. This tactic conceals the true nature and origin of illicit funds or operations.
Criminals exploit the confidentiality obligations of attorneys and accountants to shield the true owners of illicit funds. By routing transactions through professional trust accounts and invoking a perception of absolute privilege, they ensure beneficial ownership remains concealed, achieving the core objective of hiding the origins of illicit proceeds.
By interposing a proxy as the nominal controller, criminals create a hidden layer that shields the true beneficial owner or the origin of the funds.
Bearer instruments eliminate formal ownership records, enabling criminals to conceal the true beneficial owner or source of illicit proceeds. This is the primary objective, as anonymity is central to their use.
Professional intermediaries use their expertise and legal privileges to create opaque corporate or trust structures, hiding the true ownership and source of illicit funds behind nominal arrangements or complex documentation.
Offshore secrecy laws, limited beneficial ownership disclosure, and protective legislation specifically obscure true ownership and the criminal origin of funds, forming a vital concealment layer.
Offshore gambling licenses utilize complex, lightly regulated structures that allow criminals to obscure the origin, ownership, and control of illicit funds, achieving the goal of concealment.
Offshore transfers often involve the use of shell companies and trusts in secrecy jurisdictions specifically to mask beneficial ownership and conceal the criminal controller of illicit funds.
Fraudulent transport documents obscure the true nature and value of transactions, concealing illicit funds and ownership.
Beneficial ownership manipulation systematically alters or reassigns official ownership or beneficiary records, creating constantly shifting structures that mask the ultimate controllers and their illicit assets. The primary objective is to obscure beneficial ownership and complicate investigations.
Rotating brokerage account owners or authorized traders, including nominee controllers and fake identities, explicitly obscures the identity of the true securities controller. This practice hinders beneficial ownership transparency and tracing efforts.
Criminals exploit trusts and fiduciary arrangements as intentionally opaque legal structures to disguise the true beneficial owners, complicating efforts to trace illicit assets and maintain anonymity.
Virtual companies rely on intangible corporate structures, minimal beneficial ownership disclosure, and nominee arrangements to mask the true controllers and the origin of illicit funds. The primary objective is to structurally hide who really controls the assets, thereby obstructing straightforward AML inquiries.
Through corporate structuring, criminals establish complex or layered business entities explicitly to obscure beneficial ownership and the illicit origin of funds, leveraging legitimate-appearing corporate frameworks to conceal ultimate control.
Shell companies and falsified documents are established to obscure the ownership or origin of funds, enabling a fraudulent M&A façade.