Who’s behind that shell company? We may never know

Summary

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The Indicator from Planet Money

Episode: Who’s behind that shell company? We may never know
Original Air Date: May 26, 2026
Hosts: Waylon Wong, Sally Hershaps

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Episode Overview

This episode explores the Corporate Transparency Act (CTA), a recent U.S. law designed to curb illicit finance by requiring most small businesses to disclose their true owners to the federal government. The hosts discuss why anonymous shell companies are a problem, detail how the CTA was intended to work, debate the law’s possible repeal, and examine pushback from business groups—highlighting the broader tension between transparency and privacy in the U.S. economy.

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Key Discussion Points and Insights

1. The Problem: Anonymous Shell Companies in America

• Historical Example: In 1989, ownership of a Fifth Avenue skyscraper in NYC was secretly transferred to the Iranian government using shell companies, circumventing sanctions ([00:25]).
• Money Laundering in the U.S.:

  “The easiest place and safest place in the world for Iran to evade our sanctions is to buy property on Fifth Avenue... how easy it is to launder money in the United States.”
  — Waylon Wong ([00:36])

2. The Corporate Transparency Act: What It Does

• Purpose: Mandates most small businesses disclose names, addresses, dates of birth, and government IDs of their owners ([03:02], [04:29]).
• Timeline:
  • Passed under the first Trump administration with bipartisan support.
  • Took effect in 2024.
  • Put on hold a year later under the second Trump administration, pending new rules targeting only foreign-owned companies ([00:54]).
• Current Status: Republicans are moving to repeal most of the law ([00:54]).

3. Why Shell Companies Are Suspect

• Formation is Too Easy:

  “You can form a company in the United States without naming who it is. …If that company is involved in nefarious activity, law enforcement has no idea who’s behind it.”
  — Waylon Wong ([03:15])

• Real-world Consequences:
  • Afghanistan War Example: U.S. contracted a company, later discovered to have Taliban ties ([03:32]-[03:59]).
  • Motivation for Terrorists:

    “Because it was a really good contract and it was millions of dollars.”
    — Waylon Wong ([04:15])

4. The Scale of the Problem

• Global Context:

  “Shell companies have legitimate uses, like holding assets or for mergers... but a trillion dollars around the world is held in ‘empty corporate shells’ used for tax engineering, avoidance, and even tax evasion.”
  — Host ([06:05], [06:28])

• Ease in the U.S.:
  • U.S. ranked #2 globally (after Kenya) for ease of anonymously forming companies ([05:48]-[06:02]).

  • “So is Kenya and the U.S. and we won. We won. We won number one.”
    — Jodi Vittori ([05:58])

5. The Pushback: Small Business Concerns

• Cost and Complexity:

  “It will cost small businesses $263 billion to comply with the law... if every small business spent $8,000 to fill out the form.”
  — Sally Hershaps summarizing the National Small Business Association’s claim ([07:03])

• Privacy and Constitutionality: The NSBA argues the law is unconstitutional and burdensome ([06:28]).
• Lawsuit: The NSBA is petitioning the Supreme Court ([07:26]).
• Confusion on Applicability:

  “The law says all beneficial owners are required. That's anyone with ‘substantial control’ or anyone who owns or controls at least 25%. …That could be almost any employee.”
  — Sally Hershaps/Summarizing Todd McCracken ([08:05])

• Risks: Fear of unintentional noncompliance leading to criminal penalties ([08:05]).

6. Counterpoints from Financial Crime Experts

• Actual Impact: Most small businesses are non-employer firms (i.e., single person, no ambiguity on ownership) ([08:39]).
• Criminals Will Lie:

  “People lie on forms all the time. That doesn’t disappear just because it’s about anonymous shell companies.”
  — Jodi Vittori ([09:12])

7. Lessons from the UK & The Role of Transparency

• Crowdsourced Checking:

  “When [the UK] made their databases public… civil society groups and journalists became very good at actually becoming sort of de facto checkers... There was a ton of what’s been nicknamed boss babies, a whole bunch of one year old [shell company owners].”
  — Jodi Vittori ([09:27])

• Improvement Potential: Public databases lead to accountability.

8. Looming Repeal & Future Risks

• Congressional Moves: Two bills seek to permanently exempt Americans from the law ([09:53]).
• Warning:

  “The US is already basically the easiest place in the world to launder money and this will be, ‘like a giant White House ballroom-sized welcome mat for criminals.’”
  — Jodi Vittori ([09:53])

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Memorable Quotes

• “We were literally paying people who were shooting at our troops. We were probably paying for those bullets and guns.”
  — Waylon Wong ([03:47])

• “You don’t want to show up with a suitcase of cash... So instead you have anonymous, anonymous company buy your real estate for you.”
  — Jodi Vittori ([05:19])

• “You can see in theory there’s a one-year-old in charge... maybe they shouldn’t be getting a DOD contract. Just saying.”
  — Jodi Vittori ([09:27])

• “Ready your shell company names, Waylon.”
  — Sally Hershaps ([10:24])

• “Mine’s going to be Boss Baby LLC.”
  — Waylon Wong ([10:24])

• “It’s taken.”
  — Sally Hershaps ([10:26])

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Timestamps for Important Segments

• [00:25] — NYC shell company example, Iran and sanctions
• [00:54] — Background and status of Corporate Transparency Act
• [03:02] — Difficulty of tracing company owners in the U.S.
• [03:32] — Afghanistan war, shell companies, and Taliban connections
• [04:29] — How the CTA was designed to work
• [05:19] — Shell companies for disguising illicit money and bribes
• [06:05] — Trillion-dollar estimate of illicit flows
• [06:28] — Small business pushback begins
• [07:26] — Lawsuit and Supreme Court petition
• [08:05] — Confusion over definitions of “beneficial owners”
• [09:12] — “People lie on forms all the time” (Jodi Vittori)
• [09:27] — UK’s public database & “boss babies” story
• [09:53] — Congressional bills to repeal CTA for Americans; warning from experts

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Tone and Language

The hosts maintain a lively, slightly irreverent tone while digging into policy complexities and highlighting the absurdities of the system (“Boss Baby LLC,” “white house ballroom-sized welcome mat for criminals”). Quotes are often delivered with deadpan or incredulous humor, especially when discussing real-world shell company abuses.

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Conclusion

This episode of The Indicator illustrates the persistent challenge of rooting out financial crime in the U.S. business landscape. The debate around the Corporate Transparency Act encapsulates the conflict between anti-corruption efforts and fears of overburdening small businesses with federal regulation, all while the U.S. remains a favored playground for anonymous corporate shell games.

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Transcript

[Waylon Wong]

Npr.

[Sally Hershaps]

In the late 1970s, a gleaming skyscraper was built on Fifth Avenue, just a couple blocks from Rockefeller Center. It was a lot like all the other skyscrapers, kind of tall and boxy, a lot of windows, until.

[Narrator/Host]

Until in 1989, the nonprofit that owned the building secretly transferred ownership to the Iranian government through a series of shell companies.

[Waylon Wong]

Stop and think about that for a minute. The easiest place and safest place in the world for Iran to evade our sanctions is to buy property in on Fifth Avenue. I don't know what more you need to know about how easy it is to launder money in the United States.

[Sally Hershaps]

Now we have a fairly new law that could have prevented this. It's called the Corporate Transparency act, and it makes it mandatory for most small businesses formed in the US to submit information on their owners. It had bipartisan support and passed under the first Trump administration. It took effect in 2024, but just a year later, Trump's second administration basically put it on ice. And now Republicans are trying to repeal most of it.

[Narrator/Host]

This is the indicator from Planet Money. I'm Waylon Wong here with friend of the show Sally Hershaps. It is good to have you back Sally.

[Sally Hershaps]

Hello. Hello.

[Narrator/Host]

Today on the show, the Corporate Transparency Act. What is it, how's it supposed to work and what happens if the law is repealed?

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[Sally Hershaps]

So to create a new company, you're often asked for less information than you need to get a library card. Gary Kalman is one of the founders of the FACT Coalition. That's an international organization that fights illicit finance.

[Waylon Wong]

Most people don't realize that you can form a company in the United States without naming who it is. You can hire an agent, they can go to a lawyer, they can set up the company. The lawyer can name themselves as a contact. And if that company is involved in nefarious activity, law enforcement has no idea who's behind it.

[Narrator/Host]

Gary says, take this one time. Back in 2009, when the US was in Afghanistan, the Department of Defense had contracted with a US Based trucking company.

[Waylon Wong]

It turns out that that company had strong ties to the Taliban.

[Sally Hershaps]

What? Wait a second.

[Waylon Wong]

You are right to go. Wait, wait. Right? This is insane. We were literally paying people who were shooting at our troops. We were probably paying for those bullets and guns.

[Sally Hershaps]

So wait, were they really providing the service? Was it like an operational company? Yeah, so we were buying clothes or food or. Yep. Whatever it was from this company. And so wait, why would the Taliban want to do this?

[Waylon Wong]

Because it was a really good contract and it was millions of dollars.

[Sally Hershaps]

Gary says groups like the Taliban need to make money to fund their operations, and they can't just operate openly. So hiding behind shell companies is an easy fix.

[Narrator/Host]

Now, we want to be clear that shell companies have legitimate uses, like holding assets or for mergers or acquisitions. But the Corporate Transparency act was intended for when those companies are used for illeg legal purposes. The law requires business owners to share four pieces of information with the federal government. Name, address, date of birth, and a copy of a government id. But one Sunday night in March of last year, Trump's treasury tweeted out an announcement. It wasn't going to enforce the law until new rules were established to target foreign owned companies only.

[Sally Hershaps]

Jodi Vittori is a professor at Georgetown. She's also a retired Air Force lieutenant colonel and was assigned to NATO's only counter corruption task force. Says criminals can't just carry around suitcases of cash, so shell companies can come in handy.

[Jodi Vittori]

Somebody took a bribe and you want to go buy a property or something. You don't really want to show up with a suitcase of cash. And when somebody asks you how you got the cash, you're like, oh, I took a bribe from, you know, like this oil company. You know, that's kind of awkward, you know, oh, I work for Putin, you know, whatever. You don't want to do that. So instead you say, have anonymous, anonymous company buy your real estate for you. Purchase the Property or the car or whatever for you.

[Narrator/Host]

Jodi says some economists did a study. They sent emails out to services that offer to form shell companies around the world.

[Jodi Vittori]

The one place where it's easiest to open a company even when you look like you were terrorism finance was the

[Narrator/Host]

United States, except Kenya which came in first place.

[Jodi Vittori]

So is Kenya in the US and we won. We won. We won number one.

[Narrator/Host]

Well, number two actually. But this is not a prize we won.

[Sally Hershaps]

No, no.

[Narrator/Host]

It's hard to estimate how much money flows through anonymous shell companies. But according to a report from the International Mon. Trillion dollars around the world is held in quote, empty corporate shells. They're used for tax engineering avoidance and even tax evasion. Often these companies don't even have a physical presence and few or no employees.

[Sally Hershaps]

Still, there are serious concerns about the Corporate Transparency act. Like turning over personal data to the federal government. The National Small Business association says the law is burdensome and unconstitutional. Todd McCracken is president and CEO. He says their 65,000 plus members are being affected.

[Sponsor/Advertisement Voice]

So we feel like we're caught up in this, this activity that has nothing to do with us but being forced to bear the brunt of, of data collection, data reporting, worries about penalties and fines.

[Sally Hershaps]

According to Todd's association, it will cost small businesses $263 billion to comply with the law. That's two just for the first year. They got that number by estimating the cost if every small business in America spent $8,000 to fill out the form. That includes their time and costs like data protection software in case the federal government loses businesses data.

[Narrator/Host]

The National Small Business association is so upset it's filed a lawsuit and even petitioning the Supreme Court to take the case.

[Sally Hershaps]

Thought of all of the things that must be on small companies minds right now. Health insurance, the rising price of gas, wages are going up. We have inflation. And it just really struck me that this was a major agenda item for the organization.

[Sponsor/Advertisement Voice]

It is. Well, it's something that we've heard from our members. I mean it's a big concern of theirs going forward. And it's also one that we feel like we can make a difference on.

[Narrator/Host]

Todd says there's confusion over who has to submit data. The law says all beneficial owners are required. That's anyone with quote, substantial control over a company or anyone who owns or controls at least 25% of a company. He says in a small business that could be almost any employee. And if someone gets it wrong, they could even end up in prison.

[Sally Hershaps]

But Jody and Gary, our financial crime experts say this isn't confusing and that like a lot of federal laws, only someone who willfully breaks it would get in trouble.

[Waylon Wong]

Truly, small businesses don't have a problem. And by the way, over 80% of small of businesses in America are non employer firms. Meaning there's one person, they don't have any employees. No one's confused about who owns them.

[Narrator/Host]

Confusion aside, there's another issue. Will illegitimate companies even fill in the paperwork properly? We asked Jody about this.

[Sally Hershaps]

Well, hold on a second. If I'm a criminal, it seems very unlikely that I would fill in my name like Sally the criminal.

[Jodi Vittori]

Yes.

[Sally Hershaps]

In this registry. Wouldn't I just like pay off someone to register? Register for me?

[Jodi Vittori]

Absolutely. So I, I still have the problem of people lying on forms. That doesn't. People lie on forms all the time. That doesn't disappear just because it's about anonymous shell companies.

[Narrator/Host]

She says the UK has a law similar to the Corporate Transparency act on the books. And a solution emerged.

[Jodi Vittori]

One of the things that the United Kingdom found when they made their databases public is that civil society groups and journalists became very good at actually becoming sort of de facto checkers for them. You know, people found that there was a ton of what have been nicknamed boss babies, a whole bunch of one year. But it gives you a starting point. You can see that in theory there's a one year old in charge and maybe they shouldn't be getting a DOD contract. Just saying.

[Narrator/Host]

I would give a baby a DOD contract. Just saying.

[Sally Hershaps]

You're a softie. Two bills are currently moving through Congress. One was proposed in the Senate and one in the House, but both would do pretty much the same thing permanently exempt Americans from the law. Jody is really concerned. She says the US is already basically the easiest place in the world to launder money and this will be, quote, like a giant White House ballroom sized welcome mat for criminals. Ready your shell company names Waylon.

[Narrator/Host]

Mine's going to be Boss Baby llc.

[Sally Hershaps]

It's taken.

[Narrator/Host]

This episode was produced by Julia Ritchie and engineered by Sina Lofredo. It was fact checked by Sierra Juarez. Kicking Cannon is our editor and the indicator is a production of n.

[Waylon Wong]

This

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