Yesterday Mossack Fonseca was thrown into the spotlight after 40 years of being one of the most secretive companies in the world. German newspaper, Suddeutsche Zeitung (SZ), revealed a huge leak of internal documents which implicates a number of government heads and leaders using shell companies to harbour billions of dollars. According to the International Consortium of Investigative Journalists (ICIJ), the group who passed the documents to SZ, the documents provide an unprecedented insight into the use of offshore financial centres.
Who is Mossack Fonseca?
Mossack Fonseca is a Panama-based law firm whose services include incorporating companies in offshore jurisdictions as well as wealth management. The firm runs a world-wide operation and has franchises around the world, acting for over 300,000 companies.
The data leaked amounts to over 11.5 million documents and more than 2.6 terabytes of information from the internal Mossack Fonseca database. This leak is the largest ever; far surpassing the likes of WikiLeaks in 2010 and Edward Snowden in 2013. The information released includes bank statements, emails and client information dating back several decades.
Mossak Fonseca’s Comments
Mossack Fonseca has said it is not willing to make comments about specific cases due to client confidentiality and it strongly defends its conduct following allegations of foul play. It firmly states that it complies with all anti-money laundering regulations and carries out thorough due-diligence on all its clients. Whilst explaining it regrets any misuse of its services; it says it cannot be held responsible for failings by intermediaries.
It is important to stress that not all individuals who use offshore structures are criminals. In fact, there are a number of legal reasons to use these structures; for example, inheritance and estate planning purposes. However, some of the insights gained into the activity of the shell companies suggest anonymous company structures have made it possible for considerable money-laundering to be carried out.
Many are concerned that this information could be very dangerous for some individuals, and could even cause political conflict. How government leaders involved will respond remains to be seen but it is expected this will cause considerably more instability than Snowden’s actions in 2013.
Mossack Fonseca said in a statement to the ICIJ; “We have not once in nearly 40 years of operation been charged with criminal wrongdoing. We’re proud of the work we do, notwithstanding recent and wilful attempts by some to mischaracterise it.”