BENEATH A PANAMANIAN MOON: CRIMINALISING SECRECY The term Panama - PDF document

BENEATH A PANAMANIAN MOON: CRIMINALISING SECRECY The term “Panama Papers” has The End of ‘Anonymous’ become a by-word for fjnancial Companies skulduggery. On 3 April 2016, Since the Panama Papers leak, the International Consortium a number of measures have of Investigative Journalists been introduced to ensure revealed that it had a cache of greater transparency. In April, more than 11 million leaked the government put forward fjles from the Panamanian proposals to force foreign law fjrm Mossack Fonseca. companies buying UK property These papers disclosed details to disclose their ultimate Christine of heads of state, ministers owners. The following month, Braamskamp and elected offjcials who had David Cameron, the former Partner, Corporate set up ofgshore companies to Prime Minister, hosted the fjrst Crime, K&L Gates conceal bribery, arms deals, international Anti-Corruption tax evasion, fjnancial fraud and Summit. Attendees pledged to drug traffjcking. The Panama “end the misuse of anonymous Papers represented a web of companies to hide the proceeds deception devised to obscure of corruption” and to “driv[e] ownership. Twenty years ago, out those lawyers, real estate secrecy was a fundamental tenet agents and accountants who of banking and fjnance. Today, facilitate or are complicit new regulations are being in corruption”, with the UK brought in to erode secrecy and government confjrming that, promote transparency. The from 30 June 2016, companies’ Panama Papers’ leak provides annual returns to Companies added impetus. The combined House must contain benefjcial James G. Millward efgect is that companies need ownership details, via the Associate, Corporate to take a fresh look at how they People with Signifjcant Control Crime, K&L Gates do business and who they do register. Meanwhile, at the business with. 9

BENEATH A PANAMANIAN MOON: CRIMINALISING SECRECY beginning of October, Ireland’s Organisations must ascertain Minister of Finance, citing the and be able to evidence the UBO Panama Papers, condemned of those parties they are doing tax evasion and promised to business with. The risks of criminalise individuals who fail failing to do so are vast. to disclose ofgshore accounts The Panama Papers leak has from 2017. sparked international regulators The momentum towards to begin investigations into enforced transparency will money-laundering, aimed at be relentless. Some of Britain’s uncovering instances where ofgshore territories have even funds have been provided to consented to exchange benefjcial the targets of sanctions and or ownership information from used for terrorist fjnancing. Do their registers with each other. you know if you are exporting to For wrongdoers, and those the cousins of President Bashar who help conceal their al-Assad? identities, there will be fewer Certain individuals have places to hide. enormous incentives to Are you doing business with disguise their identities. And Bashar al-Assad? the penalties of dealing with them are severe. In September The fourth EU anti-money 2016, it was reported that the laundering directive will be fully U.S. and Dutch authorities implemented in all member proposed a $1.4 billion states by 26 June 2017, which fjne to settle allegations requires that ultimate benefjcial that the Scandinavian owners (UBO) are identifjed. telecommunications company ‘Who are you doing business Teliasonera paid bribes to with?’ is the key question. 10

BENEATH A PANAMANIAN MOON: CRIMINALISING SECRECY win business in 2007. Some With hacking and malware, of the allegations focused on whistleblowing is easier than a company linked to Gulnara it has ever been. The Panama Karimova, the daughter Papers’ leak exemplifjes this. of former President Islam The clear message is that Karimov. But camoufmaging organisations can no longer identities is not a far away afgord to operate on the problem in a foreign country. basis that unsavoury details As the journalist Alan about their business can be Rusbridger notes, “Anguilla, kept secret. Bermuda, the British Virgin One eye on the present and Islands, the Cayman Islands, two eyes on the future Gibraltar, Montserrat, and the The Panama Papers’ leak Turks and Caicos islands remain underscores the importance of “secrecy jurisdictions”, actively developing a forward-looking, supported and managed from ethical compliance culture. Britain and intimately linked Companies should be wary of with the City of London.” falling into the trap that strict No secret is now sacred adherence to the law in 2016 The incentives to blow the will protect their business in whistle are enticing. Aside 2019, or 2023. The new order from ofgers of immunity from is intolerant of sharp business prosecution - available on practice. Without a proper focus both sides of the pond - in on implementing an appropriate the US whistle blowers are culture in which to conduct also eligible for a “bounty” business, organisations of 10 per cent to 30 per cent will now face an ever-increasing on successful enforcement of risk of exposure externally federal securities law violations. and internally. 11

BENEATH A PANAMANIAN MOON: CRIMINALISING SECRECY Remember, remember an organisation is indirectly facilitating corruption by Anti-corruption compliance assisting in tax evasion and can no longer be treated as aggressive tax avoidance, a secondary concern. It is at corporate secrecy, or corporate the top of the political agenda and individual fjnancial crime, and should be at the top of the such as bribery and money corporate agenda. To stay out laundering. An approach of the fjring line, organisations to business which involves need to anticipate how they satisfying black letter law can protect themselves against currently in force while ignoring evolving risks. The Panama unethical business practice Papers’ leak illustrates that the is increasingly risky, as the risk of wilful blindness and of consequences of disclosure are failing to perform meaningful harder and harder to avoid. due diligence may mean that Christine Braamskamp leads the Corporate Crime and Regulatory Team in the London offjce of K&L Gates where the practice concentrates on multi-jurisdictional white collar crime, health and safety, (sports) ethics and governance and crisis management. 12