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Investigations that led to closure

Member: Nifa

News that Mossack Fonseca, the firm at the heart of the so-called ‘Panama Papers’ is to close down is a reminder of how important reputation is to a business. In a recent statement the Panamanian law firm said that “reputational deterioration” and “the financial consequences and irregular actions by some Panamanian authorities” had caused irreparable damage to its business, resulting in the “total ceasing of public operations” at the end of March.

The scandal, which was uncovered by a consortium of investigative journalists in 2016, involved the leaking of 11.5 million files from the firm’s digital archive showing how many wealthy and influential people had created offshore businesses to protect their assets from national tax regimes.

At least 150 investigations were opened in 79 countries to examine possible tax evasion and money laundering. Icelandic ex-Prime Minister Sigmundur David Gunnlaugsson resigned after the papers showed members of his family had offshore accounts, while former Pakistani Prime Minister Nawaz Sharif was disqualified from office for life after being implicated in the documents.

Following the breaking of the scandal, HM Revenue & Customs (HMRC) announced that its Taskforce has opened special financial reviews into 43 high net worth individuals in the UK. In addition, they identified a number of leads relevant to a major insider-trading operation led by the Financial Conduct Authority (FCA) and supported by the National Crime Agency (NCA).

According to a statement from HMRC after the scandal broke, the Taskforce had acquired and analysed data that enabled the authorities to uncover and take swift action on evidence of wrongdoing, no matter how deeply hidden the arrangements were.

This was a reference to forensic investigations, including the work of forensic accountants, that sifted through vast volumes of papers and transcripts and followed every money trail until the provenance of money or the beneficial ownership of companies was uncovered.

Author: Roger Isaacs 26 March 2018

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