EU threatens to sanction tax havens like Panama – French regulator demands extra information from banks

BERLIN, April 7, (Agencies): The European Union has threatened to sanction countries like Panama if they continue to refuse to cooperate fully to fight money laundering and tax evasion, after a leak of data showed the tiny country remains a key destination for people who want to hide money.

A leak of 11.5 million documents from Panama-based law firm Mossack Fonseca showed it had helped thousands of individuals and companies from around the world to set up shell companies and offshore accounts in low-tax havens.

Because such accounts often hide the ultimate owner of the money, they are a favored tool to launder money, pay bribes or evade taxes. So far, the scandal has brought down the leader of Iceland and raised questions about the dealings of the president of Ukraine, senior Chinese politicians, famous actors, athletes and the circle of friends of Russian Vladimir Putin, who some allege has profited indirectly from such accounts. “People are fed up with these outrages,” said Pierre Moscovici, who heads financial affairs for the 28-nation EU. He took to task countries like Panama that facilitate such secretive, low-tax accounts.

“The amounts of money, the jurisdictions and the names associated with this affair are frankly shocking,” he said. Speaking of countries like Panama, he said the EU has to “be ready to hit them with appropriate sanctions if they refuse to change.” Panama is listed by the EU as a country that is not cooperative on tax issues, and Moscovici urged the country to “rethink its position in this regard.”

The Central American country’s government said late Wednesday it is creating an international committee of experts to recommend ways to boost transparency in its offshore financial industry. President Juan Carlos Varela said the committee’s findings will be shared with other nations so joint action can be taken to boost transparency in legal and financial centers worldwide. But Varela defended Panama against what he called a “media attack” by wealthy nations that he says are ignoring their own deficiencies and unfairly stigmatizing Panama.

Europe is also home to countries with a record of acting like tax havens and providing banking secrecy — Luxembourg, Switzerland, Andorra, among others. The United States has also become a haven, with several states including Wyoming and Delaware now popular places to open anonymous accounts that are cheap to maintain and pay little or no local tax. Since the first reports were published Sunday, prominent politicians, celebrities and businesspeople have had their offshore business dealings dragged into the spotlight. On Thursday, the German newspaper that first obtained the socalled Panama Papers, said it won’t publish all the files, arguing that not all are of public interest. France’s ACPR financial sector regulator has told French banks to hand over extra information about their business ties with tax havens following “Panama Papers” leak, a spokeswoman said on Thursday.

“All of this new information was immediately taken into account and we also asked French banks to provide additional reporting on their activities in countries considered to be tax havens,” the spokeswoman said. Britain’s finance watchdog said Thursday that it has given banks and financial firms until next week to reveal whether they have any links to the law firm at the centre of the Panama Papers leak. A spokesman for the Financial Conduct Authority (FCA) said it had written to about 20 companies asking to explain their relationship with Panama-based Mossack Fonseca by April 15.

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