This paper examines the complex role of shell companies within India’s corporate and financial ecosystem, emphasising their dual character as both legitimate business tools and high-risk vehicles for illicit activities. While shell companies can facilitate investment structuring, asset holding, and cross-border transactions, their opacity makes them vulnerable to misuse for money laundering, tax evasion, benami ownership, and concealment of undisclosed foreign assets. Through an analysis of major global scandals such as the Panama Papers and the 1MDB fraud, the study illustrates how shell structures can be weaponised to obscure financial trails and enable corruption. In the Indian context, the paper evaluates the legal and regulatory framework governing shell entities across multiple statutes, including the Companies Act, 2013, the Prevention of Money-Laundering Act, 2002, the Benami Transactions (Prohibition) Amendment Act, 2016, and the Black Money Act, 2015. It assesses the government’s increasing reliance on strike-offs, physical verification, beneficial ownership requirements, and stringent reporting obligations to curb corporate opacity. The study also investigates the role of corporate service providers and their potential involvement in facilitating illicit transactions through the creation and management of shell companies. It highlights the effectiveness of India’s recent regulatory measures, such as the push for enhanced disclosure requirements and increased scrutiny of foreign direct investment, but also identifies gaps and challenges in enforcement. While legislative reforms have made progress, there remains a need for stronger inter-agency coordination and a more robust global framework to address cross-border misuse. Furthermore, the paper suggests that technological advancements, such as blockchain and AI-driven data analysis, could significantly enhance the government’s ability to trace and monitor shell companies more effectively.