20 UK banks and 44 other financial services firms have been asked to check for ties to the Panamanian law firm Mossack Fonseca & Co and to notify the Financial Conduct Authority (FCA) accordingly.
The unprecedented leak of 11.5 million files from the world’s fourth largest offshore law firm was first picked up by the press on 6 April 2016 and exposed the extent to which Panama has been used as an offshore jurisdiction to hold assets and interest anonymously. The International Consortium of Investigative Journalists reported that more than 500 banks had registered nearly 15,600 shell companies with Mossack Fonseca.
Following the leak, the FCA has requested “updates on any significant issues or relationships identified and a full response, detailing your findings, when your investigation is concluded“.
Whilst the FCA has declined to comment on which banks and firms it has written to and precisely what kind of information it is looking for, the FCA has confirmed the request falls within its remit and “responsibility to ensure the integrity of the UK financial markets“. Tackling money laundering and financial crime is one of the FCA’s seven priorities for this year and the FCA expects “all authorised firms to have systems and controls in place to mitigate the risk that they might be used to commit financial crime”.
Reports of the leak have been frenzied not only due to its unparalleled size, but also because of the profile of those exposed: celebrities, global organisations and politicians, including 12 national leaders from around the world. The FCA is co-ordinating its investigation with HM Revenue and Customs, the National Crime Agency and the Serious Fraud Office. Journalists are portraying Panama as a secretive jurisdiction associated with money laundering, bribery, corruption and tax avoidance.
Mossack Fonseca robustly defends its conduct in the matter. In a statement that can be read here, Mossack Fonseca says that it has operated beyond reproach for 40 years and suggests that media reports, supposition and stereotypes have portrayed an inaccurate view of the services they provide.
Police in Panama raided the head offices of the firm on 13 April “to obtain documentation linked to the information published in news articles that establish the use of the firm in illicit activities“.