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If you’ve been watching the news lately, you have likely heard a great deal of discussion about the so-called “Panama Papers.” However, few people really understand what they are, and what they mean.
Today, we wanted to provide a brief Q&A on the Panama Papers to help keep you informed of the details and their implications. If you have any questions about the Panama Papers, or legal offshore reporting requirements in general, please do not hesitate to contact the law office of Weisberg Kainen Mark, PL today.
What are the Panama Papers?
The Panama Papers is one of the biggest leaks of confidential documents and data in history—11.5 million documents to be precise. An anonymous source by the name of “John Doe” leaked them to the German newspaper, Süddeutsche Zeitung, in 2015, which then shared them with the International Consortium of Investigative Journalists (ICIJ). The ICIJ is a group of investigative journalists from around the world who collaborate on investigative stories. The ICIJ shared the documents with over one hundred media outlets around the world, which have begun the process of distributing the information contained in the Panama Papers to the general public.
Why are they called the “Panama Papers?”
The stolen documents were taken from the Panamanian law firm and corporate service provider Mossack Fonseca, & Company. The documents provide information on thousands of Mossack Fonseca’s clients and their financial dealings.
What kinds of information do they reveal?
People are still working their way through the massive trove of documents, but they reveal a wide-variety of information—compiled by Mossack Fonseca—about over 200,000 offshore companies for which Mossack Fonseca acted as a registered agent. These companies, held mostly in the British Virgin Islands, Hong Kong, and Panama, were mostly set up as vehicles to anonymously hold assets—better known as shell corporations. The information provided in the leak includes the identities of the owners and shareholders of these corporations.
So why is this a big deal?
Shell corporations have the potential to be used for a wide variety of illegal activity such as money laundering and tax evasion. Since owners can remain anonymous by setting up holding corporations in jurisdictions such as Panama which have strict privacy laws, they can effectively hide dirty money, avoid paying high taxes, and much more. The Panama Papers are a big deal because they link hundreds of high profile individuals around the world, including heads of state, star athletes, and more to these shell corporations.
Is everyone on the list a criminal?
Not at all. There are many perfectly legitimate reasons to set up offshore corporations. When properly set up and reported to tax authorities, offshore companies can be an excellent, legal vehicle for your assets in many circumstances. However, the investigation into the information provided in the Panama Papers has demonstrated links between many of the named shell corporations and illegal activity like tax fraud and even drug trafficking.
What does all this mean, big picture?
Due to the size of the leak, it will take a significant amount of time to parse through all of the information included in the Panama Papers. However, by “following the money” investigators are beginning to uncover numerous people who have taken advantage of the anonymous structures provided by tax havens in order to conduct illegal activity, and many of these people are incredibly high-profile individuals. We have already begun to see ramifications from the leak with Iceland’s Prime Minister resigning under intense pressure from his citizens after being named in the Panama Papers as being connected to offshore holdings.
From a practical standpoint, the Panama Papers stands as a powerful example of the importance of maintaining proper offshore reporting compliance. Our attorneys at Weisberg Kainen Mark, PL are experienced in these complex reporting requirements, and will take the time to explain to you all of your options and the filing obligations relating to your offshore financial accounts. We will work to ensure that your legitimate offshore holdings remain legitimate, so that you don’t one day find yourself on a leaked list of those who have illegally abused the system. Contact us today to further discuss the disclosure of your offshore accounts, offshore entities, and offshore assets.
Weisberg Kainen Mark, PL
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