Panama Papers provide insider view of efforts to hide UBOs


Obscuring UBOs lies at the center of ‘wealth protection’ efforts

The avalanche of Mossack Fonseca documents disclosed in the Panama Papers leak provides extraordinary detail in how to conceal Ultimate Beneficial Owners in order to avoid taxes and financial disclosure requirements, according to the New York Times.

The in-depth feature, published yesterday, focused on Mossack Fonsecka’s strategies for U.S. clients, of which there were approximately 2,400. The Times reporters noted that while there are various legitimate reasons for setting up offshore shell companies and accounts, the massive law firm “offered a how-to guide of sorts on skirting or evading United States tax and financial disclosure laws.”

For example, the story describes in detail the Mossack Fonseca tactic of “locating an individual from a ‘tax-convenient’ jurisdiction to be the straw-man owner of an offshore account, concealing the true American owner, or encouraging one client it knew was a United States resident to use his foreign passports to open accounts offshore” even though the person’s residence was clearly in the United States.

And leaked documents show that if a bank asked too many CDD/KYC questions about the true owners of accounts during an account opening, the law firm would simply move on to other banks that were less inquisitive.

Details also track the law firm’s strategy of creating for U.S. customers private foundations and affiliated companies in a location like Panama so these customers could then manipulate deposits and expenditures in manners that completely obscured the money trail. Mossack Fonseca—while supplying the strategies and services—also required customers to sign disclaimers that their advice was merely suggestions.

Representatives of Mossack Fonseca limited their comments to their assertions that they had done nothing wrong, and that the firm’s Compliance efforts have increased as Compliance regulations have escalated. They also have published a statement about the general media coverage, which contends that the reports rely on “suppositions and stereotypes.” AML experts consulted in the Times story said that the extensive paper trail between the law firm and each of its clients may motivate U.S. authorities to pursue charges in some of these cases.

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