Por: Laura Paola Villa García | Posted on November 4, 2019
One of the biggest leaks of data is known as Panama Paper and involved the world’s fourth biggest offshore law, Mossack Fonseca. Data was obtained from an anonymous source given to German newspaper Süddeutsche Zeitung. The size of the data leaks is enormous as 11.5 million documents and 2.6 terabytes were obtained from Mossack Fonseca’s internal data base (Harding, 2016).
Fact: Who gave what to whom and why?
The law firm Mossack Fonseca created during its forty years of existence 214,000 shell companies. A compilation of files show that the firm registered the majority of its companies in tax havens such as Virgin Islands with the purpose of making its beneficial owners untraceable through public records. These companies held accounts in European banks, which was a popular scheme through which the financial industry worked.
Behind Mossack Fonseca there were around thirty-three individuals or companies that had been blacklisted by the US Government for terrorism and trafficking offenses (Transparency, 2019).
After the data leak, it was revealed that around 140 public officials were involved in the scandal. Twelve chiefs of state were involved as well (O’Connor, 2018). Also that Mossack Fonseca worked through the following analogy: just as a manufacturer cannot be held liable if his product is used to commit crimes, Mossack Fonseca cannot be held liable for the possible crimes committed using the financial services provided to physical and moral persons (Transparency, 2019).
In addition, in other data leak which occurred just after the scandal involving Petro Poroshe, Ukraine’s ex-president, it was revealed how the firm covered violations of beneficial ownership transparency rules (Transparency, 2019).
As a result of the scandal, two founders of the law firm were arrested in Panama in a joint investigation with Brazilian prosecutors. Also, in December 2018, authorities of the United States accused four former employees of the firm (Transparency, 2019).
United Nations Convention Against Corruption
Why the case is relevant?
This case is relevant not only because it involved chiefs of State but also because it involved the biggest European banks such as Deutsche Bank, “which held shell companies accounts belonging to convicted formed Prime Minister Pakistan Nawaz Sharif” (Transparency, 2019). In fact, one if the most important Chiefs of State involved was Vladimir Putin due to the fact that his best friend, Sergei Roldugin, is in the middle of the scandal where Russian State money was deposited in tax haven bank accounts (Harding, 2016).
A very important lesson to learn from this case is that is necessary to strengthen Know Your Customer policies so as to prevent money laundering. It is also important to monitor client transactions and accounts constantly, especially in the case of politically exposed persons. It is recommended that compliance officials make sure that there is a cyber security policy in order to protect data and sensitive information (O’Connor, 2018).
What type of corruption is it and what are the crimes involved?
According to the International Consortium of Investigative Journalists, in January 2020, the first individuals investigated for the Panama Papers will be put on trial for tax evasion, fraud and money laundering (Fitzgibbon, 2019).
First, tax evasion is the “illegal non-payment or under-payment of taxes, usually by deliberately making a false declaration or no declaration to tax authorities” (Fitzgibbon, 2019).
Second, fraud has to do with deceiving someone with the purpose of obtaining money. In this particular case, the majority of defendants so far are also accused of wire fraud.
Lastly, they are also accused of money laundering which has to do with hiding the origin, property and destination of resources obtained illegally, by making them appear as legal through legitimate economic activities (Fitzgibbon, 2019).
References (Harvard – Anglia)
Anticorrupción, 2015. Un Breve Glosario de Terminología.
O’Connor, D., 2018. RiskScreen. [Online]
Available at: O’Connor, D. (2018). Panama Papers pandemonium – Compliance and KYC lessons from the new chaos. Retrieved 24 October 2019, from https://www.riskscreen.com/kyc360/article/panama-papers-pandemonium-compliance-kyc-lessons-new-chaos/
Transparency, 2019. Transparency. [Online]
Available at: https://www.transparency.org/news/feature/three_years_after_the_panama_papers_progress_on_horizon
Harding, L., 2019. The Guardian. [Online]
Available at: Harding, L. (2016). What are the Panama Papers? A guide to history’s biggest data leak. Retrieved 24 October 2019, from https://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers
Fitzgibbon, W., 2019. International Consortium of Investigation Journalists. [Online]
Available at: icij.org/investigations/panama-papers/trial-date-set-for-us-panama-papers-case/
Anticorruption, I., 2019. ICC Anticorruption. [Online]
Available at: https://iccwbo.org/content/uploads/sites/3/2015/07/ICC-Anti-Corruption-Third-Party-Due-Diligence-Spanish-Version-1.pdf