A year after Panama Papers, is enough being done to stop illicit finance?
One year ago today a group of more than 300 journalists in 79 countries sent a powerful message to the corrupt: you can no longer hide. The publication of the Panama Papers on 3 April 2016 was a shot heard around the world against corruption. Suddenly one of the most closely held secrets of the biggest criminals was revealed – where and how they hide their money.
The Panama Papers showed how a Panamanian law firm helped set up 214,000 secret shell companies, many of them used by corrupt politicians, criminals and tax abusers around the world. The law firm, Mossack Fonseca, was just one of hundreds of law firms around the world that provide services that can be used to enable corruption, illicit financial flows, drug-dealing, terrorism, tax evasion and the surge in economic inequality.
The Panama Papers showed how secretly owned companies are an important vehicle for corruption that allows secret movements of money and other activity away from the eyes of law enforcement, tax collectors, regulators and others. Since the Panama Papers release, investigations have been launched into the activities of 6520 companies and individuals. The power of having information on who owns and controls companies is now clear. So, one year on, a number of governments – from Afghanistan to France to Ghana – have committed to set up public registers of the real, beneficial owners of companies.
To commemorate the one-year anniversary, Transparency International – in collaboration with the Organized Crime and Corruption Reporting Project and Global Witness – will bring some of the world’s leading investigative reporters, data activists and civil society organisations together to discuss what we have learned and where we should go next.
Living a life of luxury (on stolen assets)
One of the most galling findings in the Panama Papers leaks was how the corrupt live lavish lives of luxury with impunity. To delve more deeply into this, Transparency International has also published a new report, Tainted treasures: Money laundering risks in luxury markets, that shows in detail how luxury goods sellers – from jewellers and real estate agents to yacht builders and diamond brokers – do little if anything to check if their customers are using corrupt money to fund their high-end purchases.
Transparency International found that little due diligence is done on luxury goods buyers and where there are laws, there is little enforcement.
How can it be that in Antwerp, the largest diamond exchange in the world, no suspicious activity reports by the precious stones sub-sector had been filed up to 2014, despite this market being identified as having a high money laundering risk? Read Tainted treasures: Money laundering risks in luxury markets and find out why.
Within the luxury goods market, real estate has become a favourite destination for stolen wealth. In another new report, Doors wide open: Corruption and real estate in four key markets, Transparency International identified the ten main problems related to real estate and money laundering in Australia, Canada, the UK and the US. The report outlines how these governments should close glaring legal loopholes to prevent corrupt elites from laundering the proceeds of grand corruption in such desirable real estate markets.
Today OpenOwnership, an online tool to track the true owners of companies, will be released to the public for the first time. OpenOwnership compiles beneficial ownership data from a variety of trustworthy public sources around the world and makes it accessible within a single, streamlined platform. As more beneficial ownership data becomes available, this will allow users to see the connections between companies and people across jurisdictions.
By bringing beneficial ownership information out into the open and making it free for anyone to access and reuse, the register will help increase public scrutiny of anonymous company ownership and build a culture of corporate transparency.
As the Panama Papers showed, the combination of whistleblowers, big data and networked journalism is proving to be a powerful force for change. In coming years, governments will have to become more transparent, or increasingly they will find transparency forced upon them. And the corrupt will increasingly find once favoured destinations no longer offer them a safe place to hide stolen assets.
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