Crime Meets Code: Shell Companies, Money Laundering, And Technology
- IJLLR Journal
- 9 minutes ago
- 1 min read
Aniruddh Kamath, National Law University Odisha
ABSTRACT
Money laundering, the process of disguising illegally obtained wealth as legitimate funds, when coupled with shell companies—entities with no active business transactions, employees, or substantive existence—poses a significant threat to global financial systems. This practice results in the loss of taxes, corruption of public institutions, and the collapse of economic entities. With an estimated USD 2 trillion funnelled through such channels annually, the global financial system faces mounting strain. In India, shell companies have been pivotal in enabling high-profile scams like the 2G and coal scams. While advancements in technologies like artificial intelligence (AI) and blockchain have aided in combating shell companies, these tools are increasingly exploited to create more elusive structures, exacerbating the issue. With insufficient legal safeguards in India, the threat persists. This study employs a qualitative research approach, integrating case studies of major shell company scams and evaluating the dual role of emerging technologies in combating and facilitating money laundering. It critically examines regulatory frameworks to identify gaps and proposes actionable interventions, including anomaly detection systems, blockchain-enabled transparency, AI-driven KYC protocols, and harmonised international data- sharing frameworks. Furthermore, the research highlights the urgency for legal reforms tailored to India's unique challenges, such as stricter definitions of shell companies and enhanced enforcement mechanisms. These strategies aim to mitigate misuse, contribute to financial stability, and provide a blueprint for integrating emerging technologies and legal reforms effectively, offering solutions that can serve as global benchmarks.
Keywords: Shell companies, Money Laundering, Technological solutions, Regulatory Framework.
