The Pandora Papers expose financial crime facilitators who are paid millions to hide billions of dollars


The Pandora Papers Investigation by the International Consortium of Investigative Journalists (ICIJ), a Washington, DC-based newsroom and nonprofit journalist network, revealed that there are still safe havens for those seeking to hide illicit wealth .

The people who are not mentioned as much in the media coverage of The Pandora Papers, however, are the dedicated enablers of helping the richest people in the world get richer and pass on their wealth while avoiding or avoiding taxes. These facilitators help criminals and kleptocrats launder their ill-gotten gains.

They may not be as rich as their clients, but they are paid millions to hide billions.

For many years there has been a “wealth defense industry”Made up of a coalition of professionals – ranging from advisers and bankers to lawyers, accountants, notaries and real estate agents – who use anonymous shell companies, family offices, offshore accounts and trusts to help the richest people in the world to protect their assets from tax collectors.

These highly paid “enablers” help oligarchs, dictators and criminals around the world.

There have been a lot of mainstream reports on the real crimes, abuses and financial misdeeds of malicious foreign states and wealthy individuals. But what about the financial system intermediaries who handle the details and provide the escape mechanisms for criminals?

Some elites pay respected professionals and businesses to open political doors, lobby against sanctions, wage legal battles, and launder money and reputations. In doing so, these institutions and individuals push the boundaries of the law and degrade the principles of our democracy.

According to Deloitte Investigation Report on Anti-Money Laundering Preparedness 2020, the amount of money laundered in a year is estimated between 2 and 5% of world GDP, or between 800 and 2 trillion dollars per year.

ICIJ FinCEN files offer unprecedented insight into a secret world of international banks, anonymous customers and, in many cases, financial crime.

They show how banks blindly transfer money to their accounts for people they cannot identify, failing to report transactions with all the hallmarks of money laundering for years after the fact, and even doing business with clients involved in financial fraud and public corruption scandals.

Corruption and financial mischief are by nature secret and often deeply complex. Black silver – mostly spending intended to influence political outcomes without any information on the source of the money – buys access to courts and politicians, thus making society less fair and more inequitable.

What often sets the ordinary rich of the oligarchy is that all oligarchs invest in the defense of wealth. They use their power and wealth to accumulate more power and wealth, to lobby and to rig the rules around them.

One of the challenges in the fight against financial crime is the global race to the bottom among tax havens that try to attract customers by offering more lucrative incentives and a higher degree of secrecy for businesses. Enablers who are part of the wealth advocacy industry develop and market strategies, structures, and schemes to avoid tax obligations and regulatory oversight.

Anti-money laundering beneficial ownership databases have become an increasingly popular reform around the world the day after the Panama Papers, which has drawn international attention to how corporate anonymity can enable a range of social ills.

As this trend continues, it is hoped that as more jurisdictions institute greater beneficial ownership and tax transparency initiatives, remaining ‘one-off’ offshore destinations like Bermuda, the Cayman Islands and Malta will be sanctioned by the threat of exclusion from the global financial system.

In the meantime, many jurisdictions continue to evade law enforcement agencies that stalk secret leads of money from tax evaders and criminals.

With all the obvious regulatory and enforcement gaps, and the apparent lack of political will to actively and practically address these gaps, there are some encouraging signs that governments around the world are under pressure to act.

There is now a growing global demand for greater transparency and accountability, combined with calls to address growing inequality in wealth as well as investor demands for the adoption of ESG (environmental, social and governance principles). ).

While these factors play a role in attracting the attention of senior political leaders, the cynical reality is that the likely main motivation for such leaders is the serious and alarming trend of a reduction in tax revenue. Approval of the concept of a 15 percent minimum overall tax rate by G7 leaders at their June 2021 summit is a clear indication that the winds of change are coming.

The current model is not sustainable. Fiscal realities, along with political pressure and necessity, will force political leaders to act. Soon they will have to do much more than lip service to the inequality of wealth and the imbalance of power, which allows the wealth advocacy industry and their clients to subvert the system and destroy it. ” avoid paying their fair share.

Greater transparency and accountability are needed to expose the catalysts and narrow the loopholes that allow wealthy individuals and criminals, as well as corporations, to operate with impunity.

Marc Tassé is professor of accounting at University of Ottawa / University of Ottawa.

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