A research on the Italian fiscal shell companies turnover
| Date | 25 June 2024 |
| Pages | 1092-1103 |
| DOI | https://doi.org/10.1108/JMLC-03-2024-0055 |
| Published date | 25 June 2024 |
| Author | Antonio Pellegrini |
A research on the Italian fiscal
shell companies turnover
Antonio Pellegrini
Department of Management, University of Rome La Sapienza, Rome, Italy and
Financial Intelligence Unit for Italy, Bank of Italy, Rome, Italy
Abstract
Purpose –The purpose of this paper is to study the turnover of Italian shell companies (SCs)/missing
traders used fortax crimes, a predicate offence of money laundering.This research could be useful for Italian
obliged entities to the Anti-Money Laundering Law to detect and report SCs, as soon as possible, to the
FinancialIntelligence Unit for Italy.
Design/methodology/approach –The author uses a sample of 32 SCs that are present in the Third
Penal Section of the Italian Supreme Court in the period 2018–2020, involved in tax crimes and that have
presented their balance sheets for two or more years. For SCs, theauthor computes the averages for: the
turnovergrowth rate from first and the maximum turnover; the years between these two values; and the years
in which SCs are active. Moreover, the author verifiesif SCsare similar in terms of turnover by studying the
relationship betweenthe turnover growth rate and the first turnover and the reduction of turnoverstandard
deviations.
Findings –SCs growth is very high and they reach,on average, their peak in less than three years; SCs are
active, onaverage, for about four years; eventually,SCs exhibit a convergence process in turnover levels.
Originality/value –To the best of the author’s knowledge,there are no studies that analyse the SC turnover.
Keywords Turnover, Money laundering, Shell companies, Balance sheet, Growth rate, Tax crimes
Paper type Research paper
1.Introduction and research purposes
Shell companies (SCs) are vehicles used for legal and illegal goals (Tiwari et al.,2020).
Among illegal purposes, there are tax crimes, such as the issuingof false invoices to obtain
fiscal illicit benefits, which are a predicateoffence of money laundering (FIU, 2020). For this
reason, according to the Italian Anti Money Laundering Law (AMLL), the subject obliged
entities (SOEs), such as financial intermediaries (FIs), when they find out an SC used for tax
crimes, also known as “missing trader”in value added tax (VAT) fraud, have to report as
soon as possible (art. 35 AMLL) a money laundering suspicious transaction report (STR)to
the Italian FinancialIntelligence Unit for Italy (FIU, 2020).
According to the Italian literature (Guardiadi Finanza –GdF, 2017;FIU, 2020;Pellegrini
et al.,2020;Casazza and Lupo, 2021), the classical SC used for tax crimes is a firm with a
high level of turnover that grows exponentially, but at the same time, it has no personnel,
assets, bank debts, value added andhas ashort lifespan; the main reason for the existenceof
an SC is to produce false invoices to permit other real companiesto reduce their fiscal base
and then to pay less taxes and to obtain false VAT credits.
I thank Chiara Bentivogli for her useful advices and suggestions. The contents and opinions
expressed in this writing do not bind the institution to which I belong (Bank of Italy). I am solely
responsible for any errors and inaccuracies.
JMLC
27,6
1092
Journalof Money Laundering
Control
Vol.27 No. 6, 2024
pp. 1092-1103
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-03-2024-0055
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
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