SHELL companies - which exist on paper only, with no real employees or offices - have legitimate uses. But the untraceable shell also happens to be the vehicle of choice for money launderers, bribe givers and takers, sanctions busters, tax evaders and financiers of terrorism. The trail has gone cold in many a criminal probe because law enforcers were unable to pierce a shell's corporate veil. The international standard governing shells, set by the inter-governmental Financial Action Task Force (FATF), is clear-cut. It says countries should take all necessary measures to prevent their misuse, such as ensuring that accurate information on the real (or "beneficial") owner is available to "competent authorities." More than 180 countries have pledged to follow it. A forthcoming study* scrutinises the level of compliance worldwide. The results are depressing. Posing as consultants, the authors asked 3,700 incorporation agents in 182 countries to form companies for them. Overall, 48% of the agents who replied failed to ask for proper identification; almost half of these did not want any documents at all. Contrary to conventional wisdom, providers in tax havens, such as Jersey and the Cayman Islands, were much more likely to comply with the standards than those from the OECD, a club of mostly rich countries. Even poor countries had a better compliance rate, suggesting the problem in the rich world is not cost but unwillingness to follow the rules (see chart). Only ten out of 1,722 providers in America required notarised documents in line with the FATF standard. Providers were often strikingly insensitive even to clear criminal risks. The authors sent three main types of e-mail: the first from a low-risk alias from a country such as Norway or Australia; the second from a high-corruption-risk individual purporting to work in government procurement in such places as Kyrgyzstan and Equatorial Guinea; the third a terror-financing risk, working for a Muslim charity in Saudi Arabia. Providers were less likely to respond to the corruption category than the low-risk one, but also less likely to ask for identification when they did reply. Finding takers for the terrorist financier was harder, but not impossible: one in every 17 providers was willing to set up an anonymous shell for him. Informing the incorporators of the international rules they should be following made them no more likely to do so, even when penalties were mentioned. When the undercover authors offered to pay a premium to flout the rules, the rate of demand for identity documents fell precipitously. "Your stated purpose could well be a front for funding terrorism," one American provider replied - and then indicated he would consider establishing and administering the shell for $5,000 per month. This study, by far the most thorough of its kind, makes sobering reading for anyone who worries about the link between financial crime and corporate secrecy. OECD countries show little willingness to tackle their own weaknesses and end their hypocrisy. In America, by some measures the least compliant of all, the incorporation-friendly states and business groups opposing reform continue to have the upper hand, despite valiant attempts by Senator Carl Levin to push through legislation that would require the registration of beneficial owners. Movers of dirty money know where the best shells are to be had, and it is not on a Caribbean island.