Is It Still as Easy to Hide $1 Billion 5 Years After the Panama Papers?
April 3 this year marked five years since 11.5 million leaked documents detailing information for more than 214,000 offshore companies were brought into the public sphere, in what is known as the Panama Papers leak. Now, five years on and against a backdrop of rapid digitization, it is crucial to ask whether the world has really learned that much from the Panama Papers and to question how the measures in place to mitigate tax evasion have been strengthened, if at all.
The Panama Papers scandal has been widely analyzed, scrutinized, and assessed since the first papers were leaked in 2016. The leak unearthed decades of financial wrongdoing and detailed the works of Panama-based law firm Mossack Fonseca. The papers shed a light on how Mossack Fonseca enabled a handful of wealthy individuals to create shell corporations to manage their assets and taxes.
Although shell corporations are not illegal in and of themselves, their anonymity and lack of transparency mean that they can be used for tax evasion, fraud, and evading sanctions. The vast majority of the leaked Panama Papers revealed tax avoidance—the minimizing of tax—which is perfectly legal. However, the leak did show that some individuals used Mossack Fonseca for tax evasion—which is illegal. The use of shell companies means that the ownership and financial history of these assets can be hard to determine. If records were modernized with new technologies, these types of scandals would eventually become a thing of the past.