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Pandora Papers: Sweeping reforms needed to rein in lawless offshore industry

Decisive law enforcement action required to hold both perpetrators and their enablers to account

The Pandora Papers bring home the need to rein in the lawless offshore industry, Transparency International said today. The governments that have been holding up meaningful reforms towards ending the abuse of corporate secrecy should find themselves out of excuses.

The Pandora Papers is a large-scale investigative project by the International Consortium of Investigative Journalists, the Organized Crime and Corruption Reporting Project and media outlets in 117 countries. Journalists have analysed the documents leaked from 14 law firms and company formation agents – acting as corporate service providers – in a dozen secrecy jurisdictions.

The secret documents reportedly show high-level officials, oligarchs and billionaires moving wealth offshore while concealing their identities, buying real estate and luxury goods – all with the help of corporate service providers. Over 300 politicians from 90 countries – including 35 former or current government leaders – are alleged to have evaded scrutiny and shielded themselves with anonymity.

“Ironically, political leaders who should be taking action to tackle the flows of dirty money have themselves been abusing the system’s opacity and benefitting from the status quo,” said Maíra Martini, Transparency International’s anti-money laundering expert. “In the months to come, they will have a lot of explaining to do – to the public and hopefully also to the authorities.”

This unprecedented peek into the underworld of the offshore industry must create a new momentum for ending the decades-long abuse of anonymous companies. No one should be able to hide behind companies that exist only on paper in even one jurisdiction.

The Pandora Papers come at a time when the world is moving closer to a new global standard on corporate transparency. Transparency International has been calling on the Financial Action Task Force to require public, central registers of company owners in all countries. This would also prevent jurisdiction-shopping seen in the new reports.

Despite the damning evidence from the Panama Papers, corporate service providers continue to operate with little scrutiny and obligations in many countries – including in Panama itself. It is also crucial that anti-money laundering obligations are extended to private sector intermediaries such as corporate service providers, and that supervisory authorities are well-equipped to keep them in check.

Finally, law enforcement action should extend not only to individuals named in the Pandora Papers, but also the corporate service providers over their role in facilitating corruption and financial crime.

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Transparency International Secretariat

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