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Why are shell banks called "Shell" banks?

I read somewhere it was because of their origin in the Caribbeans but I don't see the link.

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  • I'm sure it's because it's just a pass through entity, like the shell game/magic trick where most of the shells are empty.
    – quid
    May 30 '17 at 21:30
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It has nothing to do with the Caribbeans...

A "shell" in nature is just a casing - it has no internal substance, but instead covers (or hides) the actual substance or organism. Think of an egg shell or a conch shell - they have no meaning other than to contain or hide something inside it.

A shell bank is a bank that has no physical presence in any country. It is an empty entity. They usually exist only to facilitate money laundering or other nefarious activities for some other entity.

A "shell corporation" or "shell company" is a similar concept - they exist only to hide or protect the actual company behind it, typically to avoid taxes.

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Shell bank means “a bank that has no physical presence in the country in which it is incorporated and licensed, and which is unaffiliated with a regulated financial group that is subject to effective consolidated supervision.

Wolfsberg Anti-Money Laundering Principles for Correspondent Banking by The Wolfsberg Group 2014,Wolfsberg Correspondent Banking Principles

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  • Welcome to Money.SE. This is a good answer, but the question already has an accepted answer from 2 years ago. May 9 '19 at 1:50

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