FCA Gives Financial Firms a Week to Carry Out Panama Leaks Reviews

Around 20 banks have been given until 15 April to conduct investigations into ties with law firm Mossack Fonseca.

Following the recent Panama Papers data leak containing information on the offshore financial dealings of wealthy and powerful people around the world, the Financial Conduct Authority (FCA), the UK’s financial regulator, has allowed banks and other financial firms another week to conduct urgent reviews of whether they are linked to the Panamanian law firm at the centre of the big document leak.

The Financial Times is reported to have seen a letter from the FCA addressed to around 20 banks giving them until 15 April to conduct initial investigations into any ties with law firm Mossack Fonseca, or to companies formed or managed by it. The FCA’s request follows the leak of over 11 million documents from the law firm which has created a stir across the globe amid allegations of tax evasion and money laundering.

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Regulated financial companies will be asked to update the FCA on any issues or relationships identified, and to detail the actions they are taking in light of the document release that exposed a network of secret offshore businesses which were allegedly used to hide wealth.

Mossack Fonseca was used by many groups including HSBC, UBS, Coutts, Rothschild and Credit Suisse to set up a large number of offshore concerns for their clients over the past 40 years. HSBC chief Stuart Gulliver had also set up his own offshore account using Mossack Fonseca saying at the time that he had opened the offshore company “purely for privacy and achieved no tax advantage and no financial advantage whatsoever”.

Money laundering and financial crime is one of seven priority areas the FCA laid out this week in its annual business plan. The watchdog reported that if it found companies with weaknesses in their money laundering controls, it would utilise its powers of enforcement to relay a deterrent message and refer these cases to the appropriate law enforcement agencies.

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Jürgen Mossack, co-founder of Mossack Fonseca, is reported to have said that “the firm had done nothing wrong and had become the subject of a witch hunt aimed at discrediting the legitimate industry of setting up offshore companies that are allowed to be used legally for both privacy and tax reasons”.

Mossack also commented: “at this point in time I would say there shouldn’t be repercussions, but I wouldn’t say that there won’t be any.”

The repercussions from the data leak highlighting the widespread use of offshore financial centres by the wealthy and powerful, meanwhile, continues to spread.

 

 

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