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Update on Panama Papers – 11/22

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Either there hasn’t been much going in the money laundering news or I’ve not paid enough attention. On the other hand, governmental investigations are run behind the scenes. Perhaps the regulators are working out of sight.

Here are a few articles I’ve noticed in the last few months.

7/28 – U.S. Prosecutors Probe ‘Panama Papers’ Law Firm’s Employees – Leaks say Department of Justice has opened an investigation of various staff in the D.C. office of Mossack Fonseca.

Update on Panama Papers – 6/27

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Here are a few recent articles on the Panama Papers leak. Doesn’t seem to be a lot of new developments since my last post three weeks ago.

6/5 – New York Times – Panama Papers Show How Rich United States Clients Hid Millions Abroad – The NYT has finally gained access to the Panama Papers.

In their research they have only found 2,400 Americans who ran money through companies set up by Mossack Fonseca, none of them high-profile, and apparently none of them from the political world.

Article tells the tale visible from correspondence for a few people who had already built a private fortune and then decided to park money overseas.

The basic asset protection shell structure includes two entities: a for-profit into which money is moved from the US, and a Panamanian based foundation which receives a contribution from the first shell, thus protecting the money from litigation, taxation, or disclosure.

More reactions to Panama Papers leak


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Here are a few more recent articles on the offshore banking industry that were of interest to me:

  • Proposed U.S. rules that won’t do much
  • Law firm at center of the leaks is closing some remote offices

5/10 – Salon – The Obama administration’s Panama Papers misfire: Why new rules to curtail global tax avoidance could actually make things worse – This article follows up on my previous comments that the proposals from the feds to counter offshore banking will do very little to stop the practices.

Article says the details of the proposals accomplish very little and could actually make things worse.

Update on Panama Papers – 6/1

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Seems there was a lull in the interesting articles on Panama Papers. Here are few articles catching my eye to get caught up.

  • How to prepare for a media firestorm
  • Searchable database released
  • A mere 35 Americans are visible in the Panama Papers database

5/9 – Nelson Granados at Forbes – Are You Law-Abiding and in the Panama Papers Database? How to Handle a Public Relations Crisis – Article is written on how a company who is legally and ethically using offshore accounts can prepare for the negative media attention when their name is revealed.

As a general concept these ideas apply to every business and charity. Getting ready in advance of a media firestorm will improve your chances of surviving the onslaught.

Short version: …

Update on Panama Papers – 5/9

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The story is getting more confusing:

  • new revelation of an old technique to launder money,
  • US government actions to reduce laundering that look to me like they are just eyewash, and
  • small investors in a local real estate project appear to be investors working through the Panamanian system.

5/5 – Star-Telegram – Panama law firm used charities’ names as cloaks for clients – One of the schemes used in hiding money through offshore companies is setting up a foundation under Panamanian law. A private foundation can be set up which requires three directors, two of which must be publicly disclosed. Intended beneficiaries must be identified but could be changed before any funds disbursed.

The way this works is the two named individuals work for the law firm while the third undisclosed person is the person hiding money. The undisclosed person calls the shots with the two staff people from the law firm following instructions. The beneficiaries can be changed at any time.

Update on Panama Papers: searchable data base, no more bearer stocks, reasons to park money offshore

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Panama will be shutting down the bearer share concept for documenting ownership of a company. ICIJ plans to release a huge database on shell companies. Also some reasons I would have an offshore company or maybe five if I was a billionaire or high official in a corrupt country.

If I was super rich, I’d park some money offshore

4/19 – Daily Beast – Obama in Saudi Arabia: What Do These Oil Sheiks Have to Hide? – Short answer: their contingency escape plans.

Article wonders why the rulers in an absolute monarchy would want to park money in anonymous offshore accounts. Article suggests there isn’t any need to do so since absolute rulers not only own the country but decide by themselves what is legal and illegal.

The reason can be found by looking around after the Arab Spring. It seems like in just a flash the governments of Tunisia, Libya, and Egypt collapsed. Even the current prime minister of Pakistan was ousted (he has since regained power) and had to flee for his life.

The longer answer for hiding money in offshore accounts is it that when things can change overnight, you need to have someplace to run and some money to work with. An escape plan.

And then there are the super rich people who made their money legitimately.

The most interesting information from the Panama Papers is what *isn’t* in the files.

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The best stories to be told as a result of the massive data leak cannot yet be written.


The really smart people use multiple layers of shell companies to hide assets.  When laundering money, one should move assets through a series of companies, with each subsequent jump being anonymous.

A long time ago I attended a continuing education class helping CPAs understand fraud. Why are such classes required? So that, hopefully, maybe, CPAs will be able to recognize fraud when it stares them in the face during the course of an audit.

During the class, the instructor went off script and explained to us how to launder money.

Update on Panama Papers – 4/19

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Hasn’t been a lot of breaking news on the Panama Papers lately. Fair amount of follow-up though.

Here are a few articles of interest to me.

  • General update. How massive stories might be staffed in future.
  • More comments on the legitimate of offshore banking.
  • Senior government officials under the spotlight.

General update

4/9 – Fabius Maximus –Those Who Are (and Are Not) Sheltered From the Panama Papers – News we’ve heard thus far is likely just the tip of the iceberg of what will ultimately come out of the massive leak. Article pointed me to the following:

4/8 – Stratfor – Those Who Are (and Are Not) Sheltered From the Panama Papers Most of the damaging information released to date hits the developing world the most. Yet the bigger impact in on the western countries where there is relatively little information.

Article starts with point that the news we’ve read so far is just the start. Also points out the big leaks are growing in frequency and volume over the last several years.

Very long article walks through on a country-by-country basis what has been revealed and how big an issue is present. A few things of interest to me:

Senior politicians are implicated in five of the former Soviet republics.

A number of current or former Politburo members in China have family members involved.

Article dives deep into the possible implications or lack thereof in each of many countries.

4/14 – New Yorker – The Panama Papers and the Monster Stories of the Future – The person leaking the story gave the material to a German newspaper, who did not have the staffing to handle the story.

More updates on Panama Papers leak. 4/14

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Here are a few articles I found of interest in the last few days on offshore banking as revealed by the Panama Papers leak.

4/7 (from 4/9 print edition) – The Economist – A torrential leak – Not much news to me or to you if you’ve been reading my posts this week. This would be a great introduction if you have just tuned in.

A couple of tidbits. The law firm involved worked with around 14,000 law firms, incorporation companies, and banks, according to an estimate by ICIJ. Somewhere around 500 banks were involved in setting up companies. HSBC reportedly set up around 2,000 shell companies.

4/6 – Politico – Panama Papers pose ethics issues for U.S. prosecutors – Apparently there is a massive roadblock for the DoJ using all the materials in the data dump. Prosecutors are not allowed to even look at material that they think might be covered by attorney-client privilege. That makes it an issue to look at anything that came out of a law firm. Many documents are under attorney-client protection and almost all documents might be so covered.

4/6 – The Australian – Panama Papers: scary revelations for HSBC – …

There are more issues revealed by the Panama Papers leaks than just tax evasion. Some contrarian opinions on how to look at offshore banking.

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The primary focus in media coverage is on tax evasion. There are other ways to look at the offshore industry. There are more and deeper legal issues involved. The tax evasion concerns under discussion are just the starting point on the list of issues that ought to generate irritation.

Following articles provide a variety of alternative views of what is going on in the Panama Papers leaks. That the articles I mention contradict each other illustrates my point that there are more issues involved than just tax evasion.

4/7 – Jason Zweig at Wall Street Journal – Panama Papers: A History of Tax Evasion from Ancient Rome to the French Revolution to 19th-Century New Jersey

Question for you to ponder: Why have people been hiding their money for over 2,000 years?

In 1934 when Switzerland made it a crime for a banker to reveal a customer’s name, they were a bit behind the curve. Liechtenstein, Luxembourg, and Bermuda were tax havens a couple of decades earlier. As a depressing note, the Swiss offered confidentiality for a fee all the way back in 1789.

Oh, the things you can learn from the Panama Papers. Did you know that documenting ownership of a shell company through bearer stocks is even a real thing?

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Yes, it is actually possible to organize your offshore company with the ownership documented with bearer stocks. Join me as I dive into the fine details of a WSJ article.

4/6 – Wall Street Journal – Panama Papers: Hiding Cash Has Become Crummy Business – Even Switzerland has joined the crackdown on hiding money. Prosecutors there leaked information on the Malaysian scandal. That’s a whole other story that I won’t go into. The point is Swiss prosecutors are going after money launderers and embezzlers. Swiss prosecutors.  You know, from Switzerland. Land-of-the-numbered-account Switzerland.

More detail from the article:

The offshore “business” has been shrinking for a long time. Article says the firm of Mossack Fonseca & Co saw a two-thirds decline in the number of companies they incorporated between 2005 and 2015, dropping from 13,287 to 4,341 in a decade.

Article says the Panama Papers say the law firm’s clients have incorporated 16,323 companies over the last three years but have closed up 28,777 in the same time. That’s a net shrinkage of over 12,000.

The company represented around 6,000 businesses in 2005 whose ownership was evidenced using bearer shares. Currently they represent 170. That’s a drop of 97% in a decade in the number of clients using bearer shares.

Bearer shares. Did you know that was even a thing? Before I get to that, let me describe bearer bonds.

Bearer bonds

Initial follow-up to Panama Papers leak

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Previously mentioned the massive leak of data about offshore banking that hit headlines this past Sunday. This is now called either the Panama Papers or Panama leak, take your pick. Here are a few of the initial articles on the follow-up that I found interesting.

There are more and deeper issues than just tax evasion. By the way, the term we should be discussing is tax evasion, not tax avoidance. Avoidance means complying with the tax law in order to lawfully reduce your tax bill. Evasion means breaking the law.

Simple introduction to offshore banking

4/4 – Vox – The Panama Papers leak, explained with an adorable comic about piggy banks – Simple cartoon gives a great illustration of a little boy hiding some quarters from his mommy in a piggy bank stored in his little friend’s closet. Lots of other little boys to the same. Eventually the friend’s mommy finds all the piggy banks and calls all the moms.

Some of the little boys may just have wanted to hide a few extra quarters from mommy because they wanted some privacy. Others may have been stealing lunch money from their schoolmates and don’t want mommy to know. Some may have been stealing from mommy’s purse. Yet others may have been wanting to save up a couple of dollars to buy an actual surprise birthday present for mommy and daddy. Some have gotten tired of their siblings sneaking into their piggy bank.

First casualty

4/5 – The Guardian – Iceland prime minister resigns over Panama Papers revelations – Watch how fast things have developed.

Massive document leak on offshore banking. Intro to the Panama Papers.

Old style money laundering. Image courtesy of
Old style money laundering. Image courtesy of

A massive amount of whistle blower information was announced over the weekend. The files are from a large law firm in Panama that helped companies and individuals set up offshore companies. This is called the Panama Papers.

There are many legitimate reasons to use offshore companies. There are many illegitimate reasons too.

I’ve just started looking at the story. Here are a few introductory tidbits.

Another major investigation of bank secrecy: Pandora Papers.

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Looks like there is another flood of reporting ready to appear in print on bank secrecy and hiding wealth.

This project will be called the Pandora Papers.

If you recall, a major series of reports back in the 2016 timeframe described money laundering efforts flowing through one particular law firm in Panama. You can read my comments on the coverage.

The International Consortium of Investigative Journalists (ICIJ) brought together around 600 journalists from about 150 media outlets to analyze a data leak with 2.94 TB of info. That’s terabytes, as in thousands of gigabytes.

The ICIJ kickoff summary was published on 11/3/21: Pandora Papers: An offshore data tsunami.

If you are at all interested in offshore banking, or money laundering, or the world-far-away of hiding or relocating wealth even without nefarious intent, you will want to pay attention.

Looks like there will be a lot of coverage, what with 330 politicians and 130 people on the Forbes billionaire list showing up in the data.

From a first glance, it looks like this project have as one focus the structure of banks and professionals that service this market.

Reporters will not be sharing Panama Paper files with criminal investigators. Reporters are thinking they are journalists, not law enforcement staff.

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A variety of governments want to get a complete set of the original files from the Panama Papers leak. The reporters are saying “no.”

4/19 – The Guardian – Panama Papers: US launches criminal inquiry into tax avoidance claims – First, a tip to the scare-mongering headline writer, editor, and reporter:

  • tax avoidance is not illegal.

Where there is tax evasion, I say throw ‘em in the clink.

On the other hand, as much as the reporter and editor may believe every penny of profit belongs to the government, it is not illegal to comply with the provisions of the tax law.

Other than announcing an investigation has begun, the article gives no more detail.

In particular, there is no indication of how DoJ plans to avoid tainting the investigation by viewing documents it knows are covered by attorney-client privilege. Based on my businessman’s limited knowledge of the law, I think the implications of knowingly viewing documents protected by attorney-client privilege would permanently taint any prosecution brought after reading those documents. That means any case that can be linked to tainted documents would get dismissed.

4/20 – Bloomberg – Panama Leak Spur New York Regulator to Seek Records From Banks – The Department of Financial Services jumps into the fray.