Meet the facilitators of crime in mainstream finance


Marc Tassé, professor, accounting, University of Ottawa / University of Ottawa.

The Pandora Papers survey conducted by the International Consortium of Investigative Journalists (ICIJ), a Washington, DC-based newsroom and nonprofit journalist network, found that there are still safe havens for those who seek to hide illicit wealth.

The people who aren’t mentioned as much in the Pandora Papers media coverage, however, are the dedicated enablers of helping the world’s richest people get richer and pass on their wealth while avoiding or avoiding taxes. These facilitators help criminals and kleptocrats launder their ill-gotten gains.

They may not be as rich as their clients, but they are paid millions to hide billions.

The wealth defense industry

For many years there has been a “wealth defense industry”Made up of a coalition of professionals – ranging from advisers and bankers to lawyers, accountants, notaries and real estate agents – who use anonymous shell companies, family offices, offshore accounts and trusts to help the world’s richest people to protect their assets from tax collectors.

These highly paid “enablers” help oligarchs, dictators and criminals around the world.

There have been a lot of mainstream reports on the real crimes, abuses and financial misdeeds of malicious foreign states and wealthy individuals. But what about the financial system intermediaries who handle the details and provide the escape mechanisms for criminals?

Kenyans read the morning papers reporting a statement issued by President Uhuru Kenyatta following reports that he is among more than 330 current and former politicians identified as beneficiaries of secret financial accounts in the Pandora Papers. (AP Photo / Brian Inganga)

Some elites pay respected professionals and businesses to open political doors, lobby against sanctions, wage legal battles, and launder money and reputations. In doing so, these institutions and individuals push the boundaries of the law and degrade the principles of our democracy.

According to the Deloitte survey on anti-money laundering preparedness Report 2020, the amount of money laundered in a year is estimated between 2 and 5% of world GDP, or 800 to 2 trillion dollars per year.

ICIJ FinCEN files offer an unprecedented glimpse into a secret world of international banks, anonymous customers and, in many cases, financial crime.

They show how banks blindly transfer money to their accounts for people they cannot identify, failing to report transactions with all the hallmarks of money laundering for years after the fact, and even doing business with clients involved in financial fraud and public corruption scandals.

The insidiousness of “black money”

Corruption and financial mischief are by nature secret and often deeply complex. Black silver – mostly spending intended to influence political outcomes without any information on the source of the money – buys access to courts and politicians, thus making society less fair and more inequitable.

What often sets the ordinary rich of the oligarchy is that all oligarchs invest in the defense of wealth. They use their power and wealth to accumulate more power and wealth, to lobby and to rig the rules around them.

One of the challenges in the fight against financial crime is the global race to the bottom among tax havens that try to attract customers by offering more lucrative incentives and a higher degree of secrecy for businesses. Enablers who are part of the wealth advocacy industry develop and market strategies, structures, and schemes to avoid tax obligations and regulatory oversight.

Databases on beneficial owners aimed at combating money laundering have become a increasingly popular reform around the world the day after the Panama Papers, which has drawn international attention to how corporate anonymity can enable a range of social ills.

As this trend continues, it is hoped that as more jurisdictions institute greater beneficial ownership and tax transparency initiatives, remaining ‘one-off’ offshore destinations like Bermuda, the Cayman Islands and Malta will be sanctioned by the threat of exclusion from the global financial system.

Two tourists walk along a white sand beach lined with trees and shrubs.
Tourists walk along Seven Mile Beach on Grand Cayman Island. (AP Photo / David McFadden)

Promising signs

In the meantime, many jurisdictions continue to evade law enforcement agencies that stalk secret leads of money from tax evaders and criminals.

With all the obvious regulatory and enforcement gaps, and the apparent lack of political will to actively and practically address these gaps, there are some encouraging signs that governments around the world are under pressure to act.

There is now a growing global demand for greater transparency and accountability, combined with calls to fight against the growing inequality of wealth also such as investors’ requests for the adoption of ESG principles (environmental, social and governance).

While these factors help to attract the attention of senior political leaders, the cynical reality is that the likely main motivation for such leaders is the serious and alarming trend of a reduction in tax revenue. Approval of the concept of a 15 percent minimum overall tax rate by G7 leaders at their June 2021 summit is a clear indication that the winds of change are coming.

Boris Johnson stands with his arms raised in front of other G7 leaders on a beach.
Leaders of the G7 countries pose for a photo in Cornwall, England in June 2021. (Leon Neal / Pool photo via AP)

The current model is not sustainable. Fiscal realities, along with political pressure and necessity, will force political leaders to act. They will soon have to do much more than speak their mouths off about wealth inequality and power imbalance, which allows the wealth advocacy industry and their clients to subvert the system and overthrow the system. avoid paying their fair share.

Greater transparency and accountability are needed to expose the catalysts and reduce the loopholes that allow wealthy individuals and criminals, as well as corporations, to operate with impunity.The conversation

This article is republished from The conversation under a Creative Commons license. Read it original article.


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