Shell Bank/entity shall mean any bank or entity, which has no physical presence in the country in
which it is incorporated, licensed or located, and which is not affiliated with a regulated financial
services group that is subject to effective consolidated supervision. For the purpose of this
clause, presence of local agent or junior level staff does not constitute physical presence. Shell
banks/entities in themselves may not be illegal as they may have legitimate business purposes.
However, they can also be a main component of underground activities, especially those based in
tax havens.