Articles on ICIJ's Panama Papers and Ramifications (4/14/16)

Introduction:  The following Wikipedia entries may offer updated information from time to time:

• Wikipedia entry on Panama Papers, here.
• Wikipedia list of people named in Panama Papers, here.

In addition, this searchable list from the Sunday Times might be worth consulting from time to time.  Josh Boswell, Tom Wills, Aendrew Rininsland, Panama papers: the names: Search our database of 37,000 names linked to Mossack Fonseca companies in the tax haven of Panama (Sunday Times 4/10/16), here.  The linked page offers at the bottom a downloadable zip file with the data, here, which includes a csv file which is apparently 102.54 MB in size (presumably this could be imported into an MS Excel file, although I have not yet done that) and a "README.TXT" file to explain certain matters about the data.  Apparently this file lists the companies and directors, shareholders, and legal agents for the companies.  

Max Ehrenfreund, What the Panama Papers don’t say about global finance is just as troubling (WAPO 4/14/16), here.  Another view of the unintended consequences of the developed world's crackdown on offshore financial activity.

Banks' disparate treatment of suspect financial activity suggests that new regulations in the United States and other developed countries, intended to prevent illicit activity, could be detrimental for charities and some less wealthy economies. 

"What the Panama Papers scandal makes really clear is if you’ve got a lot of money, you can get a bank to break more or less any law you want," said Scott Paul, a senior adviser at Oxfam America. "If you don’t have a lot of money, banks will close the door in your face just because of the risk of illegality." 

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Yet since the financial crisis made banking less profitable, some banks have decided that vetting their less affluent, less lucrative customers isn't worth the expense, experts say. In part because of the risk of scrutiny from regulators and the press, firms such as Bank of America and Barclays are now reluctant to do business in poor countries where lawbreaking is more common.\ 

Banks' withdrawal from some markets in East Africa, the Middle East, Latin America and other regions has provoked an international debate about the costs and benefits of authorities' efforts to counter illicit finance. 

"Until very recently, there really wasn't a conversation," Paul said. Without careful attention from policymakers, he warned, "it's going to be poor populations and these high-risk jurisdictions that get cut out of the financial system."  

Diplomats and charities have lost their accounts. Meanwhile, migrants working in developed countries as breadwinners for their families in poorer nations are paying more to send them money through informal channels. In the private sector and among nonprofit groups, some worry that rules issued by the U.S. government, along with the European Union and a 35-nation body called the Financial Action Task Force, are making the problem worse. 

Regulators must balance "restrictions that you want to put in place to keep the bad guys out" against "restrictions so strong that you keep the good guys out, too," argued Rob Rowe, a vice president at the American Bankers Association. "There's no easy answer." 

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"We recognize that reduced access could impede the flow of money for a family member in need," Szubin said, but he added, "We don't yet see evidence of systemic retrenchment -- and even if we truly are seeing some consolidation, we have not yet identified its scope."

I work for a Swiss Private Bank and serve wealthy Russians (Reddit 4/9/16), here.  Still another view of the offshore account morass.

For 7 years I have been working in Swiss Private Banking, serving wealthy Russian clients. I work with offshore company accounts every day. Many of our clients also had their data leaked together with the 200k other companies. In my old job I even had a meeting with one of the top managers of Mossack Fonsecca but never directly sent clients to them. 

Defending what I do here on reddit is probably as popular as justifying paedophiles so I'm prepared to get insulted. I know that I am doing good work and made peace with the fact that most people probably always will hate me for what I do. 

Anyway, I want to clear up some misconceptions and write about what people like me do and how our industry works. I actually see the recent leaks as a great opportunity for banks like mine to show to the world that they did their homework and that the bad apples that give my profession a bad reputation get sorted out.

For the last few years I have worked as relationship manager – aka private banker, I am the single point of contact for my clients when they interact with my bank. In my last job I have been in wealth structuring/planning. This is the art of setting up so called "wealth structures". A wealth structure can be a simple standalone offshore company or a super complex corporate structure with several trusts and dozens of companies, funds, foundations and partnerships etc. that form a big network of so called SPVs (Special Purpose Vehicles) over several jurisdictions.\ 

I have to admit I never really structured anything big but I studied a lot of theory on how they work and what's important. I always was very interested in the workings of international tax information exchange. So I have a good understanding on how to hide money. However, I never “hid” anything. It's some sort of fascination to me, probably similar to those people who do lock picking as a hobby but don't actually break into other people's homes. 

There are millions of different reasons for offshore wealth structuring, I am writing from the point of view of a Russian client because that's what I know best. However, please keep in mind that there is a huge difference between what a Russian and a US client can do in terms of wealth structuring (spoiler – US client's can't do much) 

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Now a few words about the USA: The son of another client had some friends from the states visiting and they pissed away all their money (Moscow is a fun city). My client helped them out and lend them 500 dollars. When the friends were back home in the states they wanted to repay the 500 dollars and sent it to my bank. I had 3 different compliance desks up my ass and it took me 3 days to credit the 500 usd to the account and I had to promise that it is a one time thing and was in no way a commercial transaction. We all do US-Policy trainings once a month and we do e-learnings all the time and we are all little experts in US banking law by now. Keep in mind that we do not serve US citizens and Green card holders and still we need to constantly observer our Russian customers that they don't suddenly go on a trip to the US without us knowing and staying there for too long etc. or engaging in any way with the US. 

Swiss banks helped hiding hundreds of billions from the IRS back in the day. Swiss banks were harbouring untaxed American money no one can argue this. The position of the Swiss banks were – we have clients from 190 different countries – it is the obligation of the clients to pay their taxes in their home countries. After all we can't know the tax law of Surinam, Dubai etc. But with the Obama administration this all changed. You can read more here https://en.wikipedia.org/wiki/Bradley_Birkenfeld 

For Americans there is no Swiss banking secrecy anymore – in 2015 pretty much every Swiss bank paid fines to the US. In total the banks paid about USD 5.5bio – Now you all will say slap on the wrist blabla and they will continue their practices etc. but it's over.
You can test it yourself, call up a few banks around the globe, say you are an American and you would like to open an account. Only very few will open an account and it will be registered with the IRS – 95% will send you to hell. The 5% who will open an account for Americans are some shit banks in Liberia or whatever, and most people don't want their money in such places (only if the money is super dodgy from the beginning).
Here's a funny video on Fatca – It's hard to believe but everything they say is true: https://youtu.be/Y-EVF7CZt_w 

This is why there are very few Americans involved in the Panama Leak. I would be very surprised to find out that Mossack Fonsecca was stupid enough to get burned with Americans – there are still tons of other clients who are much less risky. 

On the other side – the US is a heaven for any non American who would like to hide some money. One can incorporate companies without the need to show a passport in Delaware (I believe this is only possible in the US and in Somalia), US Banks now provide less information to other government's tax authorities than the Swiss. And somewhere on Reddit I read that they don't even always ask for the name of the beneficial owners of the accounts (although this is hard for me to believe). 

If you are interested in the topic you also have to listen to both NPR planet money podcasts on the topic (google it yourself I'm too lazy). They do a decent job explaining the topic.

Don Melvin, Putin: Panama Papers is an American plot to destabilize Russia (CNN 4/14/16), here.   One conspiracy theory (Wikipedia on conspiracy theory, here).

Ever wonder what the fuss over the Panama Papers is all about? 

Well, according to Russian President Vladimir Putin, it's all part of an American plot to destabilize Russia before elections are held there in September. 

That's what he said Thursday during his annual televised question-and-answer session in Moscow. 

The Russian President denied any wrongdoing, saying the leaked documents "have not specifically accused anyone of anything. They've just said, 'someone there did something,' implying officials, including the president." 

And he blamed the United States for the revelations. 

"We know that members of the American intelligence community are involved," Putin said. "The German newspaper Sueddeutsche Zeitung is owned by a holding company, and that holding is owned by the American financial company Goldman Sachs. The closer we get to the elections, the more such attacks we will see."

Jake Rudnitsky, Putin Sees U.S., Goldman Sachs Behind Leak of Panama Papers (Bloomberg 4/14/16), here.  Perhaps the same conspiracy theory.

President Vladimir Putin acknowledged that information in the Panama Papers implicating people in his inner circle to offshore transactions was accurate, but dismissed the leak -- which he tied to Goldman Sachs Group Inc. -- as part of U.S. efforts to influence Russia’s upcoming elections. 

“Odd as it may seem, they aren’t publishing false information on offshores,” Putin said during his annual call-in show Thursday. “They’re not accusing anyone of anything specific. They’re just casting a shadow.”