Limited liability companies (LLCs) and financial crimes

Abstract

Purpose

The purpose of this paper is to provide an analysis of the concept of Limited Liability Companies (LLCs) and the extent to which these present money laundering and financing of terrorism (ML/FT) risks.

Design/methodology/approach

The paper examines the historical origins of LLCs and compares the benefits derived from using LLCs as an instruments or vehicle for doing business as opposed to the risks and vulnerabilities attached to them. In particular, the paper examines how LLCs present risks and vulnerabilities for ML/FT risks, before assessing existing methodologies for assessing such risks and vulnerabilities and their strengths and weaknesses.

Findings

It was found that existing frameworks used to assess risks attached to the use of LLCs could be strengthened. Reference is made to the manner in which the USA has strengthened its legislation in order to prevent the misuse of LLCs for criminal purposes.

Originality/value

The paper's conclusions may be relevant for defining methodologies in assessing the risks that LLCs constitute in different countries for ML/FT.

Citation

Gup, B.E. and Beekarry, N. (2009), "Limited liability companies (LLCs) and financial crimes", Journal of Money Laundering Control, Vol. 12 No. 1, pp. 7-18. https://doi.org/10.1108/13685200910922615