Shocking. We have just witnessed the biggest data leak in journalistic history. Let's just say that hell breaks loose. No fluff.
A brief on Panama Papers
A set of 11.5 million confidential documents created by Mossack Fonseca, the Panama-based corporate service provider, were posted by a German paper, Süddeutsche Zeitung (SZ). The documents reveal information – in detail – on over 214,000 offshore companies, as well as the identities of all shareholders and directors.
The documents were nicknamed the Panama Papers.
What's even more shocking than the figures is the names found in the documents.
As reported by NY Daily News, there are 29 billionaires – listed in Forbes' list of the world's 500 richest people – who were found to be connected to Mossack Fonseca. There is also movie star Jackie Chan and soccer star Lionel Messi.
And if those are not shocking enough, try this: At least 140 offshore accounts are linked to current and former politicians worldwide, including 12 country leaders, such as Russia's President Vladimir Putin, Pakistan's PM Nawaz Sharif, and Chinese President Xi Jinping – among others.
Is it illegal to use offshore company structures?
The massive leaks raised yet another question on the legalities of offshore company structures and everything that comes with it, including offshore banking: Is it legal?
The Guardian's Luke Harding puts it exceptionally well: “Are all people who use offshore structures crooks? No. Using offshore structures is entirely legal... Are some people who use offshore structures crooks? Yes.”
Time and time again, we advise existing and potential clients about the legitimacy of going offshore. They are unsure because the mainstream media (almost) always put offshore company structures under the negative light, misleading individuals and businesses who want to better protect their wealth and assets legitimately.
We understand that people who want to go offshore often want to do it for the wrong reasons (e.g. Money laundering). However, there are legitimate reasons that make offshore structures beneficial (e.g. Protecting from your home country's uncertain political and economic environment.)
To revisit the legal/illegal issues of going offshore, please read our article on this matter here.
What the Panama Papers mean to us?
We're not sure about those whose names were identified in the documents. However, we do know that the vast coverages on Panama Papers are going to raise the general public's awareness on the issues of going offshore – including the possibilities it offers to their financial endeavors, such as estate planning, inheritance security, tax reductions, overcoming local currency and banking restrictions, etc.
For services like us, the leak means that there will be a 'natural selection' between legitimate services and illegitimate ones. With all eyes on international corporation service providers like Mossack Fonseca, those that comply with the laws, such as anti-money-laundering laws, will continue to be in business, as usual – or even better.
For you, you can now be sure that offshore structures are 'leveling grounds'. With small businesses under heavy pressure (and heavy tax burdens) in many countries, going offshore like the big boys – and experts like - do seems like a great plan.
If they can do it, why can't we?
If you have no criminal intentions, going anonymous – or simply take your assets out from your home country for better protection – is a perk that you should enjoy. True, the government and international organizations like OECD try to limit the flow of wealth through offshore centers by setting stricter rules and regulations, especially when it comes to secrecy. However, as long as big companies and public figures can enjoy all the perks of going offshore, there's no reason an individual or small business to enjoy the same perks.
We've published an article about a small UK town traders who want to go offshore. All the benefits of going offshore that are accessible to them are also accessible to you, too.
If they can, why can't you?
Read also "Doing Business in EU? Get Incorporated in Cyprus"