Paul Manafort, President Trump’s former campaign chairman, and Richard Gates, Manafort’s business partner, are alleged by an indictment to have, among other things, laundered money through shell companies and foreign bank accounts in Cyprus, Seychelles, and St. Vincent and the Grenadines. (Both have pleaded not guilty to the charges in the indictment, which include money laundering.)
In all, the indictment says, $75 million flowed through these accounts, and they funded Manafort and Gates’s lifestyles in the U.S. The indictment emerged from Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 U.S. presidential election.
A shell company is a legal entity that, as Casey Michael wrote in The Atlantic in July, exists “solely for the purpose of masking ownership of wealth, property, and other assets, serve as a middleman of sorts, helping those behind them move funds from one place to another.” Setting up shell companies, as Manafort and Gates are alleged to have done, isn’t necessarily illegal—nor are they difficult to set up. When it does became illegal, however, is when shell companies are used to evade taxes and launder money—which Manafort and Gates are alleged to have done. Having a foreign bank account isn’t illegal, either. But U.S. citizens with foreign bank accounts with more than $10,000 at the start of the year they are filing taxes must, under U.S. law, report those accounts to the U.S. Treasury. They must also declare any foreign accounts to the Internal Revenue Service while doing their taxes. Manafort and Gates are alleged to have done neither.