This is the age of widening authoritarianism and inequality, and the recent “Pandora leaks” provide an insight into how power actors operate their secret business in the 21st century. Pandora Papers are an example of how the law is being bent and broken by a system of financial secrecy across the globe.
The Pandora Papers is a leak of 12 million documents that expose the hidden wealth, tax avoidance money laundering, and few corruption cases by some of the world's leading rich and powerful. It is one of the biggest partnerships in history between 600 journalists from 117 countries and 140 media organizations to uncover many famous personalities and leading politicians, their secret offshore companies, and how they hid their wealth.
Who’s Getting Caught?
Published this week, the data reveals multiple complex networks of companies set up across borders with the purpose of hiding ownership of money and assets. This “leak” includes powerful and prominent names such as:
- King Abdullah II of Jordan: Accused of secretly building a whopping $100 million property empire between the U.S. and UK.
- Kenyan President Uhuru Kenyatta: Accused of secretly owning a network of offshore companies worth $30m for decades.
- Shakira: Accused of tax-avoiding of around €14.5 million.
- Tony Blair and his wife, Cherie: Accused of having ownership of an $8.8 million Victorian building by acquiring the British Virgin Islands company.
How People Use Offshore Banks and Shell Companies
Shell companies and offshore banks are not always evil things to avoid tax or to save your assets. People use offshore banks and shell companies to avoid authoritarian regimes and to safeguard their wealth with secrecy.
Setting up a shell company is an easy task and doesn’t cost much. Places like Panama, he British Virgin Islands, Delaware, Nevada, or Switzerland are the perfect places where hiding assets are easy as they will not reveal who the beneficial owner is or how much they wealth they have. For instance, people have the opportunity where they can hide their real identity and pay other people called “paid directors” for being the public face of a certain shell company.
The Legal Side of Pandora
Just because prominent international actors have their name in Pandora Papers, it does not always mean that it's an evil act or it is something illegal to do. In times of extreme competition and progress, many business tycoons don't want their business partners to know about their wealth and assets and others don’t want to pay tax to a flawed governmental system.
Buying property with offshore money and shell companies is legitimate for example protection from criminal attacks or guarding against unstable governments. However, some of it is a crime like money laundering and corruption or having a complex network of secret companies to move assets.
Many corrupt officials use such mediums to convert their black money into a more legal shape. This is happening because governments are claiming of having less money for infrastructure or healthcare or police or education but at the same time allowing huge amounts of tax evasion (not tax avoidance, mind you) to happen right Infront of the public eye.
What to Learn from Pandora Leaks?
Since the Pandora papers leaked, the flawed financial system of governments is exposed. The U.S. is the key player in the offshore world. It is using its role to promote offshore financial abuses and due to its powerful Dollar and its repute as the de facto global currency, it is acting as a platform for money laundering.
U.S. is keen to grab the shared information about Americans banking offshore by other less strong countries than in sharing information about money moving through U.S. bank accounts, companies, and trusts which is questionable. Political leaders have always vowed to “eradicate” corruption declaring shell companies and money laundering a threat to asset security and democracy but many of them acted opposite to what they vowed to.
How to Legally use Offshore Banking
Offshore banking isn’t illegal per se, but the way it is exploited has outlawed the sector, which make things challenging for asset holders who want to adopt offshore structures for their needs, while abiding to the laws and regulations.
For that reason, if you want to protect your wealth - or pay less taxes - using offshore structures while keeping yourself out of potential troubles, you can check up on a local lawyer who is well-versed in international business laws and treaties to see what they have to say about moving money (legally!) to foreign countries.
Alternatively, you can consult a trusted International corporate services provider to decide which jurisdiction offers the best option for you and simply open an account with a reputed offshore bank and enjoy the benefits.
OCT
2021
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