Breaking the trust : the case for regulating anonymous shell companies

Abstract

Anonymous shell companies (ASCs) are corporate entities whose sole purpose is to cloak the identity of their beneficial owner. Due to their strong anonymity provisions, ASCs allow individuals to perform a variety of illicit activities with little chance of being caught. Thus, they have been used in almost every form of economic crime. Though there is universal agreement in the policy sphere that ASCs facilitate a number of negative externalities, policymakers are divided over how they should be regulated. Specifically, policymakers are stuck in an intractable disagreement over the implementation of a public ownership register – a database containing ownership information of every company registered in a particular country. Opponents of this register argue that the public disclosure of ownership information violates a presumptive right individuals have to privacy. Proponents of this register however, deny the existence of this presumptive right. They point instead to the role of transparency in fostering accountability.

The goal of my thesis is to offer a theoretical justification for the creation of a public ownership register. In short, I argue that we can break this impasse by using the value of public trust to justify creating a public ownership register with specific provisions so as to ensure privacy rights are not infringed upon. My argument proceeds in three parts: First, I establish that trust is at least instrumentally valuable. Thus we have a pro tanto reason to implement regulations to stop trust being undermined. Second, I offer a novel account of public trust predicated on the assumption of a shared intrinsic commitment to a practice rule. Third, armed with this account of public trust, I identify two distinct mechanisms by which ASCs undermine trust. I conclude by showing how drawing on public trust provides a pro tanto reason to implement a public ownership register.