Panama Papers: Professionals charged over taking ‘extraordinary lengths’ to evade tax, launder money
06 Dec 2018

The United States Department of Justice has charged four individuals with tax fraud and money laundering in connection with an alleged illegal scheme perpetrated by Mossack Fonseca, the law firm central to the Panama Papers data leak.

The individuals, known to be professionals, comprised a US-based accountant, an investment manager, a lawyer and a Mossack Fonseca client who also benefited from the scam.

All but the lawyer, who remains at large, have been arrested.

“Law firms, asset managers, and accountants play key roles enabling entry into the global financial system,” said Assistant Attorney General Brian A. Benczkowski.

“The charges announced … demonstrate our commitment to prosecute professionals who facilitate financial crime across international borders and the tax cheats who utilize their services.”

According to the DoJ, the individuals shuffled millions of dollars for decades through offshore accounts and created shell companies to hide the fortunes, they also had a playbook to repatriate untaxed money into the US banking system.

“These defendants went to extraordinary lengths to circumvent U.S. tax laws in order to maintain their wealth and the wealth of their clients,” said Manhattan U.S. Attorney Geoffrey S Berman.

According to the indictment, the investment manager and lawyer conspired with others to help U.S. taxpayer clients of Mossack Fonseca hide their investments, and the income generated by those investments, from the Internal Revenue Service (IRS).

The pair allegedly worked to establish opaque offshore trusts and undeclared bank accounts on behalf of US residents who were clients of Mossack Fonseca.

They marketed and serviced sham foundations and shell companies formed under the laws of countries such as Panama, Hong Kong, and the British Virgin Islands, prosecutors allege.

They also allegedly established the bank accounts in locations with strict bank secrecy laws, which impeded the ability of the United States to obtain bank records for the accounts.

As structured by Mossack Fonseca, the sham foundations typically “owned” the shell companies that nominally held the undeclared assets on behalf of the clients.

“The names of Mossack Fonseca’s clients generally did not appear anywhere on the incorporation paperwork for the sham foundations or related shell companies, although the clients in fact beneficially owned, and had complete access to, the assets of those sham entities and accounts,” the DoJ explained.

In exchange for additional fees, the two allegedly provided support to clients who had purchased sham foundations and related shell companies by providing corporate meeting minutes, resolutions, mail forwarding, and signature services.

The pair also allegedly instructed clients about how to repatriate funds to the US from their offshore bank accounts in a manner designed to keep the undeclared bank accounts concealed.

Read more:

UPCOMING WEBINAR: The Inside Track – The US Senate’s Investigations into Financial Crime

HSBC ‘cooperating’ with regulators over Panama Papers’ firm Mossack Fonseca

Deutsche Bank raided over money laundering, offshore Panama Papers trouble

EU Sixth Anti-Money Laundering Directive (6AMLD) published, transposition date set

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