May 2025
JEL Classification: H26, H32, K42, L22
Keywords: tax evasion and avoidance, fiscal fraud, money laundering, buffer companies, financial statements
Buffer Companies (BCs) are used in complex fiscal fraud, where they play a role in obscuring the link between illicit transactions and their final beneficiaries. They help extend the fraud chain and shield Real and Operating Companies (ROCs) from direct involvement, while these latter ultimately benefit from illicit activities. This makes detection more difficult for AML functions of financial intermediaries. This study shows that BCs exhibit an 'amphibious' behavior, combining features of both Shell Companies (SCs) and ROCs. Based on these results, a composite indicator is proposed for identifying potential BCs, offering a screening tool for AML functions of financial intermediaries.
