Massive Leak of Secret Documents from Panamanian Firm Reveal Movement of Billions of Dollars in Suspect Transactions

Washington, DC, 3 April 2016, Global Financial Integrity.

This post was originally published on the Global Financial Integrity website.

Panama Papers Show How World Leaders, Celebrities, Wealthy Individuals and Even Governments Use and Abuse Secrecy Jurisdictions of Global Shadow Financial System

GFI Calls on Governments to Collect and Publish Beneficial Ownership Information for Accounts to Limit Future Abuses like those in the Panama Papers Leak

Leaked documents from global law firm Mossack Fonseca revealed today by the International Consortium of Investigative Journalists (ICIJ) bring to light a global shadow financial system for the rich and powerful of the world for many billions of dollars worth of transactions, noted Global Financial Integrity (GFI), a Washington, DC-based research and advisory organization. More than 11.5 million documents implicate familiar names with abuse of financial secrecy, including UBS, HSBC, Société Générale, Cyprus, Switzerland, and the British Virgin Islands.

“The size of the leak is unprecedented, but the tricks Mossack Fonseca has allegedly used for its clients are neither new nor surprising. Anonymous shell companies and the failure of governments to require lawyers, corporate service companies, or banks to collect beneficial ownership information on clients leave the door wide open for dirty money to flow around the globe virtually unhindered,” said GFI Legal Counsel & Director of Government Affairs Heather Lowe. “This is about so much more than just corruption—trade misinvoicing accounts for the bulk of illicit financial flows; the proceeds of crime are the next largest component.”

“Doing legitimate business in secrecy jurisdictions is not illegal, but the Panama Papers investigation is yet another example of how individuals and businesses are systematically abusing the secrecy they provide” said GFI Policy Counsel Liz Confalone. “Banks and law firms routinely conspire to hide their clients’ money and fail to follow through on required customer due diligence checks. The governments of the U.S. and other major financial centers particularly need to make corporate ownership information public through corporate registries. The Panama Papers investigation must be the nail in the coffin of anonymous companies.”

GFI research estimates that opacity in the global financial system, thanks to tax haven secrecy, anonymous companies, trade-based money laundering, and lax financial crime enforcement, drains at least US$1.1 trillion per year out of developing and emerging economies—more than these countries receive in foreign direct investment or foreign aid combined. This global shadow financial system bleeds the world’s poorest economies and propels crime, corruption, and tax evasion.

“Illicit financial flows are the most damaging economic problem facing the developing world,” noted Managing Director Tom Cardamone. “The Addis Ababa Action Agenda and the new Sustainable Development Goals have solidified this link between illicit financial flows (IFFs) and development. The international community needs to set strong targets for curtailing IFFs and take action towards improving global financial transparency. ”

Notes to Editors


Christine Clough
Acting Communications Director
Global Financial Integrity
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