An investigation of the Pandora Papers by the International Consortium of Investigative Journalists (ICIJ), a non-profit newsroom and network of journalists based in Washington, DC, revealed that there are still some hideouts in the hunt to hide illicit money.
However, people who are not mentioned as much in the media coverage of the Pandora Papers are dedicated to helping the world’s richest people get rich and pass on their wealth while avoiding or evading taxes. These supporters help criminals and fraudsters to launder their wrongly earned profits.
They may not be as rich as their customers, but they are paid millions to hide trillions.
money defense industry
For many years there has been a well-established “wealth defense industry” made up of a coalition of professionals – from consultants and bankers to lawyers, accountants, notaries and estate agents – who use anonymous shell companies, family offices, offshore accounts and trusts to help the world’s richest people protect their wealth from tax collectors.
These highly compensated “supporters” are aiding oligarchs, dictators and criminals around the world.
There has been a lot of mainstream reporting on the actual crimes, abuses and financial misdeeds of malicious foreign states and wealthy individuals. But what about the middlemen of the financial system who handle the details and provide a getaway mechanism for criminals?
Some elites pay respected professionals and businesses to open political doors, lobby against sanctions, fight legal battles, and launder wealth and prestige. By doing so these institutions and individuals transgress the limits of law and bring down the principles of our democracy.
According to the Deloitte Anti-Money Laundering Preparedness Survey Report 2020, money laundering is estimated to amount to between two per cent and five per cent of global GDP in a year, or US$800 billion to US$2 trillion annually.
ICIJ’s FinCEN files provide unprecedented insight into a secret world of international banking, anonymous customers and, in many cases, financial crime.
They show how banks blindly move cash through their accounts to people they cannot identify, failing to report transactions with all the hallmarks of money laundering until years after the fact. , and even do business with clients embroiled in financial fraud and public corruption scandals.
‘black money’ trick
Corruption and financial wrongdoing are by their very nature covert and often deeply complex. Black money – essentially spent to influence political outcomes without any knowledge of the source of the money – buys access to courts and politicians, resulting in society becoming less fair and more unequal.
What often separates ordinary wealthy people from oligarchs is that all oligarchs invest in protecting wealth. They use their power and wealth to amass more power and wealth, lobbying and rigging the rules around them.
One of the challenges in cracking down on financial crime is the global race between tax havens, which are trying to lure customers by offering more attractive incentives and higher levels of privacy for companies. Funders who are part of the defense industry develop and market strategies, structures and plans to avoid tax liabilities and regulatory scrutiny.
For-profit ownership databases aimed at combating money-laundering have become an increasingly popular reform around the world following the Panama Papers, which brought international attention to how corporate anonymity can enable many social ills.
As this trend continues, it is expected that more jurisdictions will have more beneficial ownership initiatives and tax transparency, with the remaining “external” offshore destinations such as Bermuda, the Cayman Islands and Malta being approved in compliance with the threat of exclusion from the global financial system. .
Meanwhile, many jurisdictions continue to shun law enforcement agencies that pursue the secret money of tax dodgers and criminals.
Because of all the obvious regulatory and enforcement gaps, and the lack of political will to actively and practically address those gaps, there are some encouraging signs that suggest governments around the world have been forced to act. He is going.
There is a growing global demand for greater transparency and accountability, combined with calls for investors to adopt ESG (Environmental, Social and Governance) principles, as well as calls to address widening wealth inequality.
While those factors play a role in attracting the attention of senior political leaders, the cynical reality is that the likely primary motivation of these leaders is the serious and alarming trend of declining tax revenues. The endorsement of the concept of a 15 percent minimum global tax rate by G7 leaders at the June 2021 summit is a clear sign that the wind of change is coming.
The current model is not sustainable. Political pressures and necessity as well as fiscal realities will compel political leaders to act. They will soon have to do much more than just serve to pay for wealth inequality and power imbalances, money that allows the defense industry and their customers to destroy the system and avoid paying their fair share.
There is a need for greater transparency and accountability to expose supporters and reduce the loopholes that enable corporate entities as well as wealthy individuals and criminals to operate with impunity.