Offshore Tax Evasion and Piercing the Veil of Swiss Bank Secrecy (250-300 words)

6/11/2020 The ‘Panama Papers’ Scandal – At A Glance - Briefly - WSJ

https://blogs.wsj.com/briefly/2016/04/05/the-panama-papers-scandal-at-a-glance/ 1/6

4:17 PM EST APR 5, 2016

Your guide to the Panama Papers.

What are the Panama papers? A huge batch of reports late Sunday linked 140 public figures, executives and celebrities around the world to overseas assets in offshore tax havens (http://www.wsj.com/articles/tax-haven-crackdown-leads-to-whack-a-mole- 1459879228) ranging from the British Virgin Islands to Panama. Iceland’s prime minister has resigned (http://www.wsj.com/articles/icelands-prime-minister-sigmundur-david-gunnlaugsson-resigns-1459874528) , while Russian President Vladimir Putin’s spokesman (http://www.wsj.com/articles/leaked-files-detailing- offshore-accounts-spark-angry-reaction-1459776381) deflected criticism. More political pressure is likely to follow.

6/11/2020 The ‘Panama Papers’ Scandal – At A Glance - Briefly - WSJ

https://blogs.wsj.com/briefly/2016/04/05/the-panama-papers-scandal-at-a-glance/ 2/6

How did this come to light?

6/11/2020 The ‘Panama Papers’ Scandal – At A Glance - Briefly - WSJ

https://blogs.wsj.com/briefly/2016/04/05/the-panama-papers-scandal-at-a-glance/ 3/6

Is this activity illegal?

What were some high-profile allegations?

Why Panama?

More than 370 journalists from 76 countries got access to millions of records from a Panamanian law firm (http://www.wsj.com/articles/tax-haven-crackdown-leads-to-whack-a-mole-1459879228) that specialized in offshore holding companies, according to the International Consortium of Investigative Journalists. The ICIJ published a group of stories (https://panamapapers.icij.org/) based on the records, alongside other reports from select news organizations. The Wall Street Journal hasn’t independently verified the contents of the records. The Panamanian law firm, Mossack Fonseca (http://www.wsj.com/articles/panama-launches-own- investigation-into-mossack-fonseca-law-firm-1459805421) , denies wrongdoing.

Having an offshore company generally isn’t illegal, but some of the intermediaries have protected their clients by hiding wealth or suspicious transactions in tax havens, the media outlets said. For political figures, the million-dollar question is how the funds were obtained and used.

Close friends of Mr. Putin (http://www.wsj.com/articles/leaked-files-detailing-offshore-accounts-spark- angry-reaction-1459776381) were involved in transactions amounting to at least $2 billion, according to the reports. But that’s not all. Relatives of China’s Politburo Standing Committee and President Xi Jinping (http://www.wsj.com/articles/leaked-files-detailing-offshore-accounts-spark-angry-reaction-1459776381) were connected to offshore companies, while Iceland’s Prime Minister Sigmundur David Gunnlaugsson (http://www.wsj.com/articles/icelands-prime-minister-sigmundur-david-gunnlaugsson-resigns-1459874528) was blamed for not disclosing partial ownership of a British Virgin Islands company.

Pan ama has long been known as a key jurisdiction for offshore corporations, because of its well-established legal system and banking infrastructure. When more than 70 Swiss banks confessed to the U.S. that they encouraged tax evasion, many said they participated in schemes using Panamanian corporations.

6/11/2020 The ‘Panama Papers’ Scandal – At A Glance - Briefly - WSJ

https://blogs.wsj.com/briefly/2016/04/05/the-panama-papers-scandal-at-a-glance/ 4/6

Is this sort of activity on the rise, or declining?

So people can no longer hide assets in offshore accounts?

Are prosecutors looking into this?

What about in less-developed countries?

Figures compiled by ICIJ show a sharp decrease in the use of such offshore vehicles in recent years. Washington has levied huge fines on international banks for evading sanctions and poor compliance, and in the U.S. it has gotten harder and harder to hide money from the IRS in offshore accounts. Since 2009, more than 54,000 U.S. taxpayers have paid more than $8 billion to resolve cases involving secret offshore accounts. Both the U.S. and the international community have projects to automatically transfer financial data that will expose undeclared offshore accounts.

While it has become much harder to hide assets from tax authorities, both in the U.S. and abroad, it’s still possible to keep cash hidden from spouses, creditors and others. For example, if a U.S. taxpayer hides assets in a tax haven from his ex- spouse, he will have to report the account on his tax return. But his spouse may not be able to obtain access to the assets because of tax-haven laws that frustrate discovery and recovery.

The U.S. Justice Department (http://www.wsj.com/articles/justice-department-reviewing-panama- documents-for-potential-evidence-of-corruption-1459791029)  says it is reviewing the documents to see if they contain evidence of corruption that could be prosecuted. Similar inquiries have been opened in the U.K., the Netherlands and elsewhere. And Panama’s top prosecutor has launched an investigation into the firm. Some of the people close to Mr. Putin who were named in the reports already had been sanctioned by the Treasury Department following Moscow’s interference in Ukraine.

Nations with little or no political opposition and powerful state-controlled media may see few changes following the leaks, even if journalists pursue follow-up stories. Other countries may find their officials’ offshore holdings weren’t improper.

6/11/2020 The ‘Panama Papers’ Scandal – At A Glance - Briefly - WSJ

https://blogs.wsj.com/briefly/2016/04/05/the-panama-papers-scandal-at-a-glance/ 5/6

Will any policies change?

MORE ON THE ‘PANAMA PAPERS’ SCANDAL

Iceland’s Prime Minister Sigmundur David Gunnlaugsson Resigns After Release of ‘Panama Papers’ (http://www.wsj.com/articles/icelands-prime-minister-sigmundur-david-gunnlaugsson-resigns-1459874528? mod=briefly_more_on)

Tax-Haven Crackdown Leads to Whack-a-Mole (http://www.wsj.com/articles/tax-haven-crackdown-leads-to-whack-a- mole-1459879228?mod=briefly_more_on)

Panama Papers: Biggest Banks Are Top Users of Offshore Services (http://www.wsj.com/articles/biggest-banks-are-top- users-of-offshore-services-1459817165?mod=briefly_more_on)

Panama Law Firm Opens Offshore Accounts for Officials World-Wide (http://www.wsj.com/articles/panama-law-firm- opens-offshore-accounts-for-officials-world-wide-1459801116pan?mod=briefly_more_on)

Video: Panama Papers: The Big Picture (http://www.wsj.com/video/panama-papers-the-big-picture/885C1795-AA90- 40D8-B480-1E081F5D9CC2.html?mod=briefly_more_on)

MORE AT A GLANCE

President Barack Obama mentioned the Panama papers Tuesday while discussing multinational companies’ efforts to avoid taxes (http://www.wsj.com/articles/president-obama-praises-new-inversion-rules-1459873977) , and the issue will likely get a lot more attention at international gatherings such as the Group of 20 biggest economies. Further reports and disclosures could help generate a wave of public outcry with efforts to tighten laws and procedures and perhaps to replace more officials tainted by the scandal.

6/11/2020 The ‘Panama Papers’ Scandal – At A Glance - Briefly - WSJ

https://blogs.wsj.com/briefly/2016/04/05/the-panama-papers-scandal-at-a-glance/ 6/6

What Fueled Second-Quarter U.S. Growth First-Quarter U.S. Growth

Fourth-Quarter U.S. GDP Growth 3% Third-Quarter U.S. Growth

AT A GLANCE AT A GLANCE

AT A GLANCE AT A GLANCE