The International Consortium of Investigative Journalists (ICIJ) announced that they will release a searchable database of a "limited selection of basic corporate information" from the Panama Papers on May 9. They have indicated that the database will include data about 200,000 offshore entities, and will potentially include data about accounts owned Americans, which it had previously excluded. Preet Bharara, the U.S. attorney for the Southern District of New York had asked the ICIJ to have access to the documents, however they declined, citing the First Amendment protection for anonymous sources.
Since the initial dissemination of information in the beginning of April, the Prime Minister of Iceland Sigmundur Davíð Gunnlaugsson resigned, along with Spain’s minister of industry José Manuel Soria, the head of the Chilean Branch of Transparency International Gonzalo Delaveau and a Uruguayan member of FIFA’s independent ethics committee Juan Pedro Damiani.
The Association of Certified Fraud Examiners (ACFE) spoke to best-selling author and anti-money laundering expert Jeffrey Robinson for the Fraud Talk podcast to get his thoughts on how money is laundered through shell companies, how he first heard about the Panamanian firm Mossack Fonseca and what can be expected in the future as a result of these documents coming to light.
The International Consortium of Investigative Journalists’
release of data concerning the Panama-based law firm Mossack Fonseca is an unprecedented look into just how widespread and interconnected fraud can be.
If the accusations of the leaked documents are true, many prominent corporations and individuals may have been abusing loopholes present in multi-national tax systems. Money laundering is an international problem. It can only be stopped through cooperation among all nations.
As the world's largest anti-fraud organization, the ACFE is pleased to provide information on money laundering schemes and methods to prevent and detect money laundering in the global financial system.
We hope that as more information emerges, the appropriate international regulatory bodies are able to investigate and prosecute any culpable parties. While fraud is by nature committed in the dark, we hope that the light shed on this large network inspires a change in the structure and enforcement of tax and anti-money laundering laws and regulations.
The ACFE’s Fraud Examiners Manual defines shell companies as business entities that generally do not have any physical presence other than a mailing address and generate little to no independent economic value.
Legitimate reasons to use a shell company include:
holding the stock or intellectual property rights of another business
facilitating domestic and cross-border currency and asset transfers
fostering domestic or cross-border currency corporate mergers
Shell companies have become common tools for money laundering primarily because they have the ability to hide ownership and mask financial details, and because money launderers can create them with minimal public disclosure of personal information regarding controlling interests and ownership. This lack of transparency prevents the discovery of suspicious transactions and impedes investigations and prosecutions.