Panama Papers Firm In Panic Mode
July 2, 2018
Leaks from inside the Mossack Fonseca Firm reveal a scramble to contain the crisis triggered by the April 2016 leak of the Panama Papers. The firm has undertaken a belated search to discover the real owners of shadow companies. It is fending off furious clients trying to swiftly move their business elsewhere, and transferring its U.S. clientele to a Delaware-based company. A Swiss banker is quoted complaining that thanks to the firm his customers have to pay income taxes in their home countries. The new leak shows that Mossack Fonseca couldn’t identify tens of thousands of owners of companies it had registered in low-tax jurisdictions. Months after the firm became aware of the records breach it was still unable to identify owners of more than seventy percent of 28,500 active companies in the British Virgin Islands, its offshore hub of choice, and seventy-five percent of 10,500 active shell companies in Panama. The know-your-client rules obligate financial institutions to know who they’re doing business with, and what they’ve done in the past. Offshore companies have legal purposes, but they are easily used illegally because of their secrecy.
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