How borders are drawn and enforced has far-reaching consequences, whether we live on either side of them or halfway across the world.

The exposure of Panamanian law firm Mossack Fonseca’s work helping the global elite hide money from the tax man, and the more recent leak of the “Paradise Papers” from firms Appleby and Estera in Bermuda, have prompted outrage and interest in corporate secrecy. In the US, it also should provide occasion for introspection, because anything Panama does, Delaware, South Dakota, and Nevada can do just as well.

In fact, the US is one of the largest recipients of illicit financial flows from developing countries—money often smuggled out by corrupt politicians, drug dealers, or everyday criminals.

The key reason is corporate secrecy. When individuals or companies want to hide their assets, they transfer them to shell companies that hide the true owners behind nominee directors who act as the custodian of the firm. Often, and especially in tax havens, the directors of the company are not required to disclose, to the tax authorities or anyone else, who the true owners are.

Mossack Fonseca set up these kinds of shell companies in Panama, and that’s why the leak of its internal records was so damaging to the people who appeared in them, including Iceland’s prime minister. The documents connected the shell companies to the people who are actually behind them.

Comparatively few Americans were found in the Mossack Fonseca’s records, and there’s a reason for that: In the US, corporate registration is handled on the state level, and many states offer generous corporate secrecy rules.

Just as small countries tend to breed the political culture that allows corporate secrecy, sparsely populated US states have competed in a race to the bottom to attract corporate investment through lax disclosure requirements. The tiny state of Delaware, called an “on-shore tax haven” by critics, garners more than a quarter of its public revenue—just over a $1 billion—from its business registry.

This probably factors into the World Bank’s assessment of the US as one of the worst offenders (pdf) when it comes to corporate secrecy. In fact, a 2012 academic study reports that it is easier to form a shell company (pdf) in the US than it is in Panama—or indeed, anywhere else but Kenya. At the top of their list? Delaware and Nevada.

Global Witness, the NGO, has documented many of the abuses of shell companies that go on in the US. In 2014, it showed how American shell companies were used by the Las Zetas drug cartel to launder millions, by Russian scammers to bilk investors, and by Americans simply to bribe US politicians. Heck, even the government of Iran owned a skyscraper in New York City for decades, hidden behind a US shell company.

John Cassara, a former Treasury agent, wrote an op-ed in 2013 explaining how embarrassing it was to explain to foreign investigators that US law enforcement could not help them identify the owners of US shell companies. There is some evidence that things may be changing, though.

The US Treasury has launched a kind of reverse sting operation intended as a pilot for new rules to prevent money being laundered through high-end US real estate. And now, taking advantage of the furor around the Panama Papers, US Financial Crimes Enforcement Network chief Jennifer Shasky Calvery is trying to garner enthusiasm for a rule that would require banks to know the true owners of corporations they do business with.

The rule has been under consideration since 2014, but it has yet to gain much steam. US corporations are reluctant to give up the market advantages that shell companies provide them in tax planning and disguising investments from competitors. And the rule would mean more work for US banks and likely a drop in business from truly illegitimate companies—the government estimates it may cost banks $700 million to $1.5 billion to implement the new regulation. But that’s a small chunk of the estimated $300 billion in illicit money entering the US annually.

This post was updated in light of the Paradise Papers revelations on Nov. 7, 2017.