Compare the two terms
A shell company has no active business or identifiable assets of its own. A shelf company is formed and kept for later use or sale. These descriptions can overlap. They describe different features of a company.
A shell description concerns business substance. A shelf description concerns formation and later use. Neither term is a substitute for examining the current activity and ownership.
- Shell company
The company has no active business or identifiable assets of its own.
- Shelf company
The company was formed and kept for later use or sale.
- Current assessment
Examine activity, ownership and the explanation. Neither label proves crime.
Company substance and company history
The descriptions can overlap. Company age is not proof of a trading history.
Separate evidence questions. An answer to one does not settle the others.
Lawful use and possible misuse
FATF describes legitimate uses for these companies, including transaction arrangements and a company available when needed. It also describes their misuse to conceal beneficial ownership. A company’s age can create a misleading impression of a trading history.
Registration, age and an adviser’s involvement do not establish lawful activity. Equally, little trading activity does not establish crime.
Example: company age and trading history
A fictional customer says a company has traded for many years. Records show it was formed years ago but only recently acquired by the customer. The reviewer asks for evidence of the claimed trading history.
The discrepancy concerns the explanation, not the legality of buying an existing company. The reviewer records the answer and applies the company CDD procedures.
Keep ownership questions separate
Identify the actual customer and the relevant people under the company CDD rules. Use the beneficial-owner article for that definition. Use the ownership and control article for the evidence needed to understand the structure.
A shell or shelf label does not remove these duties. It also does not decide the customer’s risk rating without the other relevant facts.