The Panama Papers have unveiled a large cache of information on financial wrongdoing by a number of high profile individuals across the world. The full extent of financial crime and tax avoidance the information leaked from Panama-based lawyers Mossack Fonesca contains is still being uncovered, writes Aperio Intelligence, a corporate intelligence and financial crime advisory company based in London.
Given the sheer volume of the information – some 11.5 million documents and 2.6 terrabytes of information – this will take some time. With 170 news agencies already having studied some of the papers over the course of a year there is still much more information and potential financial crime waiting to be discovered. Indeed, the UK Government and Treasury has created a new multi-agency taskforce, backed by £10m of tax-payer money to follow-up on the information contained in the files.
The taskforce is jointly led by HMRC and the National Crime Agency with additional support from investigators, compliance specialists and analysts from the Serious Fraud Office and the Financial Conduct Authority. The taskforce will investigate individuals and companies named in the files, with the FCA having already contacted 64 companies regarding the information. There are a number of reasons the Treasury – which is rightly at the centre of the British-based investigation into details present in the leaked files – has created the taskforce. One is because David Cameron’s Government has clearly stated its intention to do all it can to stamp out tax avoidance and has already made noticeable inroads.
During the past four years, agreements have been struck with known tax havens, more tax avoiders have been discovered and their taxes recouped. Chancellor of the Exchequer George Osborne has also helped bring tax avoidance and financial crime to the very top of the G8 and G20 agendas. The introduction of the Finance Act of 2015 means a raft of new and updated financial regulations are now upheld in order to try and stamp out tax avoidance and other financial crimes. And, looking ahead, the UK will become the first major country to create a free to access register of company beneficial ownership in June 2016 – making it clear who the real owners of companies are. That is quite a list with regards this issue and it’s clear the Chancellor and Prime Minister both want to stay firmly on this path.
Another major reason for the high priority assigned to investigating and putting a stop to financial crime is monetary financial gain. The Treasury – therefore the UK economy – should eventually receive significant income once criminals have been identified, investigated and required payments fines are issued and received.
Of course, these are pretty high profile, oft discussed agendas. The image of the UK’s financial services sector is another key and well-known reason for the UK Treasury’s strong commitment to uncover financial wrongdoing. The Panama Papers identify a large proportion of ‘middle men’ or ‘enablers’ who have helped facilitate the hiding of funds as being based in London. Keeping London and the UK’s reputation as the place to do financial business is as essential to the economy, if not more so, than the luxury brands the country is known for the world over.
Reputation is everything in the international business world. The UK Treasury knows this which is why money has been found to fund the taskforce and also host the upcoming Anti-Corruption Summit in May. The summit has been planned since 2015 but the timing couldn’t be better. Creating an international forum for businessmen, industry leaders, politicians and Governments from around the world where tax avoidance, anti-money laundering and anti-corruption can be openly discussed is an important step in the fight against financial crime and uncovering the guilty parties.
The Government’s published agenda for the summit is to attempt to put some workable steps towards:
exposing corruption completely;
punishing the perpetrators and supporting those affected by corruption;
driving out the culture of corruption wherever it exists.
While the Government’s record and future plans are positive, it remains disappointing that British individuals, banks and lawyers have been identified as facilitating money laundering and tax avoidance. It’s also true, though, that our financial services expertise has placed the UK at the forefront of developing advanced compliance rules and financial crime prevention techniques. The Financial Conduct Authority enforces laws and rules regarding compliance, anti-corruption, ant-money laundering and tax avoidance. In this mandate it has strong support from the Government and also the Bank of England’s Prudential Regulatory Authority.
With their guidance, financial services compliance in the UK has improved and will become stronger still. Of course some financial crime goes undetected or in some cases, is even actively aided and abetted. But, with the amount of money that flows through the industry in the city of London alone and the number of businesses and individuals trading and operating within the UK’s jurisdiction, it’s clear a lot of good work is being done. Events such as the Panama Papers are mostly unexpected and completely unwanted. But, once the shock and anger has dissipated, the world will see the UK is continuing to lead a renewed global charge against tax avoidance and other criminal financial activity. Not only will our high standards be clearly stated and widely shared and improved upon with help from others, our techniques, expertise and technology will come under close scrutiny.
As an industry we must work hard to uphold the highest level of integrity which will be on show for the world to see in May and beyond. Each individual and company involved in financial services compliance needs to carefully review their own performance, due diligence measures and processes. Many will be confident they will stand up to even the closest scrutiny. For those who aren’t, now is the time to pick from the best rules, techniques and processes and do all they can to show the UK’s financial services sector is not only among the best but is actively seeking ways to improve further and be a real asset in the Government’s fight against financial corruption.
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