MEPs Accuse Major European Banks, Law, Tax Firms of Acting as Offshore Middlemen

The Panama Papers exposed 213,634 offshore entities served by Mossack Fonseca, a Panama-based trust company, which provided MEPs — and the public — with valuable information for better understanding of offshore structures. Mossack Fonseca had a market share of approximately five to ten percent of the market and incorporated entities across 21 jurisdictions.

But almost 90 percent of all these offshore entities were incorporated in just four jurisdictions: the British Virgin Islands, Panama, the Seychelles and the Bahamas, according to the Greens in the European Parliament.

​The European Parliament Panama Papers inquiry committee (PANA) has now released a report into its investigation into the middlemen who help their clients to dodge taxes or launder dirty money, which found that there are several types of intermediaries, be it banks, law firms, accounting firms or other tax advisers that can help clients and usually it takes several of them to establish offshore structures, each of them having a specific role.

“Intermediaries can provide advice upon request but also pro-actively approach clients to offer them offshore schemes to avoid paying taxes, for example. Intermediaries can intervene at different stages: they can provide advice to customers, they can support the creation of offshore structures (registering and domiciling them for example), and/or they can assist with maintenance work (managing the daily paperwork or providing nominee directors),” the report found.

Offshore Inability

According to the Green group of MEPs in the European Parliament, a key difficulty pointed out by the study is that many of the intermediaries advising European citizens are located outside of Europe, which may make it harder to regulate them.

As the European Commission prepares to present a legislative proposal on future rules to deter promoters of aggressive tax planning schemes, the Greens have a few ideas to suggest. 

“One idea is simply to consider these middlemen as co-perpetrators of the infraction if the offshore structure is deemed to have breached the law. We already oblige these intermediaries to check that their clients’ assets are clean and are not the proceeds of crimes (e.g. drug trafficking, corruption, tax evasion),” the group said.

“In the same way, we can request bankers, lawyers and accountants not to get involved in setting up offshore structures that aim at breaking the law. If they do, they could then be prosecuted for the same crimes as their clients. This would have a tremendous deterrent effect and reduce the role of intermediaries in the illegal offshore business,” the Greens said.

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