The "Panama Papers" have laid bare how readily bad actors can circumvent global sanctions via the maze of anonymous shell companies set up in banking havens, as documented in the massive leak.
Terror groups, drug cartels, and pariah countries like North Korea -- not just tax evaders -- use them to hide flows of money that would otherwise be blocked by sanctions, experts say.
"They are designed for concealment and so are as useful for getting around sanctions as they are for tax avoidance or money laundering," said Pascal Saint-Amans, head of the Organization for Economic Cooperation and Development's unit fighting tax havens.
That's a problem as the United States, Europe and the United Nations increasingly reach for sanctions as their weapon of choice against global trouble-makers.
The United States in particular has made economic sanctions a key policy tool against countries like Iran, North Korea and Cuba, as well as extremist groups like Islamic State and Al Qaeda.
To implement its sanctions, the US Treasury publishes extensive blacklists of names of individuals and companies that banks and other companies are barred from dealing with.
The challenge is that with shell companies, it is often impossible to know the ultimate beneficiary behind it.
"They're anonymous so you don't know if it's owned or controlled by somebody who's on a sanctions list. That's a real problem," said Liz Confalone of the organization Global Financial Integrity.
According to the BBC, which has had access to the leaked Panama Papers -- a law firm's records of thousands of shell companies set up for wealthy and powerful people around the world -- 33 US-blacklisted individuals and companies based in Iran, Zimbabwe and North Korea are tied to some of the companies.
- US paradox -
Even before the Panama Papers hit the headlines, other cases made clear that offshore shell companies were being used to circumvent sanctions.
Chinese telecoms giant ZTE had established a network of secret companies which permitted it to reexport US-made electronic components to Iran in violation of the embargo imposed on Tehran for its nuclear program, according to US authorities. To punish the company Washington placed restrictions on its US business last month.
More stunning, anonymous companies set up in the British tax haven of Jersey allowed a bank affiliated with the Iranian government and restricted by sanctions to control a Manhattan skyscraper.
Iranian shipping company IRISL, placed under US sanctions in 2008, used a similar strategy. It dispersed control of its fleet of ships through anonymous companies with no evident Iranian ties in Malta and Hong Kong, according to the report "Global Shell Game" released in 2014.
Such cases are only the tip of the iceberg. Investigators chasing a case are often stymied by complex legal constructions involved in the shell companies, and by the ease with which fraudsters and sanctions-evaders move assets from one haven to another.
"It's really a cat-and-mouse game, in which sanctions evaders would get caught and form a new company, get caught again and go form another company," said Bryan Early, a sanctions specialist at the University of Albany.
US President Barack Obama himself condemned the use of anonymous companies to hide the identity of those behind them, but said it will not undermine the effectiveness of US sanctions.
"Iran would not have cut a deal to end their nuclear program in the absence of strong sanctions," he said Tuesday.
Yet the United States, in combatting banking secrecy, faces its own contradictions.
A number of US states, especially Delaware, offers anyone the ability to set up a company and move money and other assets through it while hiding their identity.
Saint-Amans said that this gives foreigners the ability to hide their US sanctions-busting activities behind a company based in the United States.
"It is the paradox of the country," he said.
The US Treasury on Wednesday told AFP that it would submit "soon" a new rule that will make it obligatory to identify the ultimate beneficiary of individual companies registered by foreigners.
Once finalized, the Treasury said, the IRS, the US tax authority, "will be far better equipped to ensure that these entities are not facilitating US tax avoidance," a Treasury spokesperson said.