The face of those in the open is there for all to see, now so too are those in the shadows.
The Panama Papers is an unprecedented leak of 11.5 million documents from a Panamanian law firm. They allege that many wealthy individuals and various current and former world leaders and government officials used the law firm Mossack Fonseca to hide assets and the identity of those who control the assets. No crimes have yet been uncovered, but the release is still new and the data will take some time to sift through by various agencies across the globe.
The days, weeks and months ahead will reveal the extent of the fallout from the release. Without digging too deep, one thing really stands out – 2.6 terabytes of data was leaked. That is not a USB stick left in the back of a taxi cab. If the leak was the result of a hack by outsiders, it means someone was able to bypass security for a prolonged period of time and begs the question of how a law firm entrusted with the secrets of the world could allow this to happen. Maybe it shouldn’t be a surprise. Some of the world’s biggest corporations have been hacked, so why not Mossack Fonseca? That is cold solace, but the lesson here is that data security is a constant vigil.
This incident is causing fallout across the globe. There is an almost frenzied reaction by many governments to understand what is in the papers and to uncover any wrongdoing.
Pakistan PM forms commission to probe ‘Panama Papers’ allegations
German minister announces new rules against offshore companies
France puts Panama back on tax haven blacklist
Russian prosecutors to check Russia-linked ‘Panama file’ reports: RIA
Austria urges EU action on money laundering after ‘Panama Papers’
The Foreign Account Tax Compliance Act (FATCA), which at first looked simply like a US law targeting compliance from foreign institutions, now looks positively prophetic and the forerunner to a wave of new regulations and standards such as CRS that seek to ensure transparency and mitigate offshore tax avoidance. Many governments are facing challenging budgets with an uncertain economic outlook. An easy and popular thing to do is recoup lost tax revenue and make life difficult for tax dodgers by continuing to build a more robust global tax compliance net.
Thomson Reuters is your foundation in a changing world. We stay one-step ahead of the regulations so you can future-proof your reporting strategy. With 25 years of experience in global tax reporting, we have the knowledge and expertise to assess and improve existing reporting solutions. To learn more, visit tax.thomsonreuters.com/fatca-crs.