A new leak of documents from the offshore service provider at the centre of the Panama Papers scandal reveals the company could not identify the owners of up to three quarters of companies it administered.
Two months after becoming aware of the data breach, Mossack Fonseca was unable to identify the beneficial owners of more than 70% of 28,500 active companies in the British Virgin Islands (BVI) as well as 75% of companies in Panama, according to new documents seen by BBC Panorama.
At the time, BVI law permitted corporate service providers to rely upon intermediaries, banks, legal firms and other offshore service providers overseas to check the identities of the owners, although they were required to provide information if requested by the authorities.
The firm was fined $440,000 (£333,000) by the BVI Financial Services Commission in November 2016 for regulatory and legal infringements of anti-money laundering and other laws.
The new leak contains 1.2 million documents dating from before the Panama Papers went public in April 2016 to December 2017. The data was obtained by Suddeutsche Zeitung which shared it with the International Consortium of Investigative Journalists (ICIJ).
Email correspondence from clients and intermediaries reveal the reaction to the leak, Mossack Fonseca’s desperate attempts to close gaps in their record keeping, and their difficulties doing so. Responding to questions from the firm, one Swiss wealth manager said: “THE CLIENT HAS DISAPPEARED! I CANT FIND HIM ANYMORE!!!!!!”
Other correspondence points to the primary reasons many clients were using offshore structures.
One Uruguayan financial planner commented: “…the main purpose of this type of structure has been broken: confidentiality”.
Another intermediary wrote: “… the names of our customers have been known by the authorities of their countries. Thanks to Mossack, customers have to pay incomes taxes.”
According to Margaret Hodge MP, former chair of the UK parliament’s public accounts committee: “This is simply further proof, if any were needed, why we absolutely must have public registers of beneficial owners if we are to stamp out money laundering, tax avoidance, tax evasion and other crimes.”
In the wake of the Panama Papers and under pressure from the UK government, the BVI and other British Overseas Territories have established registers of beneficial ownership for companies in their jurisdictions. But the register relies upon offshore service providers, like Mossack Fonseca, to provide the information. And it is only directly accessible to authorities in the BVI – the public cannot see it.
The BVI denies the register is secret and says it is accessible to the authorities and relevant UK authorities on request within one hour. They say they have been at the forefront of global transparency initiatives.
A spokesman said: “A public register is not a silver bullet. It is not about who can see the information, it’s about the information being verified, accurate, and therefore useful to law enforcement. A verified register is a far more robust and effective approach to ensure transparency than an unverified public register.”
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