The now notorious “Pandora Papers” are the gift that keeps on giving for those involved in the battle against transnational money laundering, fraud and corruption. This unprecedented leak of the personal financial information of many of the world’s most rich and powerful individuals resulted in 6.4 million documents, nearly three million images, over one million emails, and half a million spreadsheets falling into the hands of journalists from across the globe. Since 2016, the leak itself has been under investigation by the International Consortium of Investigative Journalists (ICIJ) and more than 100 media partners, the goal of which being to expose political corruption and shady dealings of the world’s elite. Shrouded by a gross lack of transparency brought about through the misuse of shell companies, trusts, foundations and other entities in low- or no-tax jurisdictions, those implicated in the Papers were found to have concealed their identities from the general public as well as regulators, allowing for illicit financial flows to cross borders and criminals and oligarchs behind them to effectively launder their ill-gotten gains

            With the final batch of Papers released earlier this month, new insights have been revealed into a vast number of weaknesses in anti-criminal financing crusades seen throughout Europe and other jurisdictions. Just recently, the ICIJ added to an already expansive database of information by publishing exclusive data of more than 9,000 offshore companies, foundations, and trusts implicated in the greater Pandora Papers scandal. With the addition of this new data, the Offshore Leaks database now contains over 750,000 names of individuals and companies with secretive offshore structures linked to over 200 individual countries and territories.¹ Upon review of the final pieces of the ICIJ’s investigation of the Pandora Papers, a notable European watchdog has criticized the European Union’s defenses against both money laundering and terrorist financing. MONEYVAL, the Council of Europe’s financial crime research branch, has levied some harsh feedback against the governments of the respective EU member states for failing to do much of anything to take on the illegal cash flows across the continent, while also allowing the scale of money laundering to increase at the international level. Known formally as the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, MONEYVAL is primarily a research organization and lacks legal authority to force European countries to strengthen their laws or increase enforcement budgets.² Instead, the group acts as a modified watchdog working in more of an advisory role on issues such as these.

            In their report on the recent findings, MONEYVAL’s chair, Elżbieta Frankow-Jaśkiewicz singled out both lawyers and accountants for being complicit in aiding money laundering, going so far as to call them “gatekeeper” professions. She claims that the ICIJ’s investigation has shown that these professionals “can be complicit in large-scale transnational money laundering schemes involving corrupt politicians, as well as high-net worth individuals seeking to evade taxes.”² The MONEYVAL report claims that European governments are failing to punish these lawyers and accountants for facilitating financial crimes. According to MONEYVAL, only three countries have systems in place to deter big banks from moving dirty money around.  

            While the report unveiled a number of new issues in need of addressing and subsequent remediation moving forward, MONEYVAL did recognize some government bodies historically known as “tax havens” that have improved their efforts to combat financial crime. Vatican City, Malta, and Andorra have all made significant improvements in their individual AML/CFT assessments, with individual members of this grouping going as far as implementing new regulations to better combat financial crime. The oft-embattled Republic of Cyprus appears to have made positive developments in this regard as well, though the Mediterranean country appeared too late for MONEYVAL to assess them. All told, the most glaring hole exposed by the report is the lack of updated databases available to help law enforcement keep track of anonymous shell companies and identify the true beneficial ownership structure of those behind them. Having such ledgers in place would make it much easier for authorities to identify beneficial ownership and peel back the layers of stand-in “owners” that only serve to mask who is really funding these accounts. So far, only a handful of European countries have these databases in place – an issue that persists in the United States as well.

Citations

1. Díaz-Struck, Emilia, et al. “ICIJ Publishes Final Batch of Pandora Papers Data on More than 9,000 Offshore Companies, Trusts and Foundations.” ICIJ, 3 May 2022. 
2. Woodman, Spencer. “Pandora Papers Shed Light on ‘Gatekeepers’ of Dirty Money Says European Watchdog.” ICIJ, 10 May 2022, https://www.icij.org/investigations/pandora-papers/pandora-papers-shed-light-on-gatekeepers-of-dirty-money-says-european-watchdog/.