The Panama Papers

Beyond Panama: Unlocking the world’s secrecy jurisdictions

The 21 jurisdictions covered by the Panama Papers data vary from the rolling hills of Wyoming to tropical getaways like the British Virgin Islands. But all have at least one thing in common – secrecy is the rule.

Secrecy jurisdictions are not just tropical islands

The 21 jurisdictions covered by the Panama Papers data vary from the rolling hills of Wyoming to the bustling streets of London to tropical getaways like the British Virgin Islands. But all have at least one thing in common: secrecy is the rule.

Panama-based law firm Mossack Fonseca has, for almost 40 years, specialized in registering companies on behalf of clients in jurisdictions that make little information available about who is really behind a company name. Among them are the more commonly-known secrecy jurisdictions like Panama, Jersey, the Bahamas and the Seychelles. But the law firm also helped clients incorporate in places not commonly associated with “offshore” finance, like the United Kingdom and U.S. states Delaware, Wyoming and Nevada.

More than 50 percent of the offshore entities in the data obtained by the International Consortium of Investigative Journalists, German newspaper Süddeutsche Zeitung and more than 100 other news organizations, were set up in Mossack Fonseca’s favored secrecy jurisdiction: the British Virgin Islands.

The BVI is ranked No. 21 in the Tax Justice Network’s 2015 list of the world’s most secretive jurisdictions, but the advocacy group warned the territory’s ranking “seriously understates its true importance in the world of offshore secrecy.” It’s a jurisdiction where companies can be incorporated quickly, cheaply, and with very few questions asked. Company ownership information is not readily available or easily-accessible online.

Among the BVI-registered entities in the Panama Papers data is a company called Wintris Inc. We now know the company was part-owned by the former prime minister of Iceland Sigmundur David Gunnlaugsson. Gunnlaugsson and his wife, Anna Sigurlaug Pálsdóttir, purchased Wintris in 2007 from Mossack Fonseca through the Luxembourg branch of Iceland’s Landsbanki, and used the shell company to invest in millions of dollars of Icelandic bank bonds. Gunnlaugsson entered parliament in 2009, but failed to declare the assets held by Wintris. After ICIJ and its media partners revealed his connection to the BVI company on April 3, mass protests erupted outside the parliament building and, barely 48 hours later, Gunnlaugsson announced he was resigning as prime minister.

Before the release of the Panama Papers database, details about the ownership of Wintris were not readily available to the public. The only online information provided by the BVI Registry of Corporate Affairs allows the public to verify official BVI company certificates issued after July 2014. Even so, a certificate number is needed to access this information. A search for the former prime minister of Iceland would have returned no results.

The Panama Papers data includes information on more than 210,000 companies, trusts, foundations and funds incorporated in 21 jurisdictions. The Offshore Leaks data published by ICIJ in 2013 adds more than 100,000 companies in 10 jurisdictions, including the Cook Islands, Cayman Islands, Mauritius and Malaysia, which are not present in the Panama Papers data.

In most cases, the identity of the individuals behind the companies registered in these jurisdictions remains secret. None of these jurisdictions provides information online about the real owners of the companies. A 2011 report by the World Bank studied 40 secrecy jurisdictions and found that “only one—Jersey—requires the beneficial owner to be identified and recorded by a government body.”

Only two jurisdictions of the 21 included in the Panama Papers data give information about the shareholders: New Zealand and Samoa. Even when the shareholders are listed, those could be nominees appointed by the law firm that registered the company.

Secrecy goes even further than hiding the identity of beneficial owners. Four of those 21 jurisdictions (Belize, British Virgin Islands, British Anguilla and Uruguay) don’t have publicly-available records online. In other jurisdictions, the available information will only let you confirm that a company is registered there.

Only seven jurisdictions publicly provide names of company directors or officers. Of the 16 jurisdictions that allow online searches of company names, 14 offer information about the status of a company, 11 provide the registration date, 10 provide an address and four identify the registered agent.

That’s in theory. Then comes practice. Registry websites can be slow and difficult to navigate. Some, like Panama and Costa Rica, require users to set up accounts to login before making a company search. Other jurisdictions don’t provide any company information online, and ask users to instead submit forms in order to access information. In some cases, payment is required to obtain records or certain information.

In British Anguilla, for example, you need to fill in an online form with your name and contact information before you can submit a request about a specific company. You won’t get the information automatically but in an email instead.

“A response should be forecoming [sic] within 24hrs on the status of the company, registration number and date of incorporation only. Additional information will be subject to the relevant fee,” the website reads.

When ICIJ tried to submit a request for a company included in the Panama Papers data, the website returned an error message.

Panama recently made changes to its online corporate registry. Though it is possible to search by company name, in order to access the full set of information it is required a combination of identification numbers connected to the company.

Over a two-week period, ICIJ was only able to successfully access the online Bahamas registry once. Other attempts were met with error messages.

Yet, the information available in corporate registries is clearly of public interest. The Panama Papers revealed that Spain’s Industry Minister, José Manuel Soria, appeared as one of the directors of UK Lines, a company incorporated in the Bahamas in 1990s. Despite his denials that he ever had a connection to an offshore company, Soria resigned on April 15.

Jurisdiction Access Search companies? Address Registration date Status Shareholder Directors
Bahamas Publicly available online registry Yes NA NA NA NA NA
Belize No online registry No NA NA NA NA NA
British Anguilla No online registry No NA NA NA NA NA
British Virgin Islands No online registry No NA NA NA NA NA
Costa Rica Online registry, requires login Yes No No Yes No No
Cyprus Publicly available online registry Yes Yes Yes Yes No Yes
Hong Kong Publicly available online registry Yes No Yes Yes No No
Isle of Man Publicly available online registry Yes Yes Yes Yes No No
Jersey Publicly available online registry Yes Yes Yes Yes No No
Malta Publicly available online registry Yes Yes No Yes No No
Nevada Publicly available online registry Yes No Yes Yes No Yes
New Zealand Publicly available online registry Yes Yes Yes Yes Yes Yes
Niue Publicly available online registry Yes Yes Yes Yes No Yes
Panama Online registry, requires login Yes No Yes Yes No Yes
Ras Al Khaimah No online registry No NA NA NA NA NA
Samoa Publicly available online registry Yes Yes Yes Yes Yes Yes
Seychelles Publicly available online registry Yes No No No No No
Singapore Publicly available online registry Yes Yes No Yes No No
United Kingdom Publicly available online registry Yes Yes Yes Yes No Yes
Uruguay No online registry No NA NA NA NA NA
Wyoming Publicly available online registry Yes Yes Yes Yes No No

“The problems go far beyond tax,” explains the Tax Justice Network in introduction to its Financial Secrecy Index. “In providing secrecy, the offshore world corrupts and distorts markets and investments, shaping them in ways that have nothing to do with efficiency. The secrecy world creates a criminogenic hothouse for multiple evils including fraud, tax cheating, escape from financial regulations, embezzlement, insider dealing, bribery, money laundering, and plenty more.”

The revelations reignited the debate about the need for public registries in which information about who ultimately controls a company be accessible to all. The UK has made disclosure of beneficial owner data mandatory and public, but British overseas territories such the British Virgin Islands and the Cayman Islands, some the busiest offshore havens, have agreed to share that information only when it is requested by law enforcement.

Citing the Panama Papers, the US government also announced Thursday that it has sent legislation to Congress to create a centralized federal registry of the actual owners of any newly created company. The registry would help law enforcement authorities ferret out the real people behind anonymous companies used in money laundering and other wrongdoing.

The governments of Australia and Germany have said that they too intend to create public registries of company owners.

Read more
Inside The Panama Papers
Panama Papers Include Dozens of Americans Tied to Fraud and Financial Misconduct
May 9, 2016 — Mossack Fonseca’s files include offshore companies linked to at least 36 Americans accused of serious financial wrongdoing, including fraud and racketeering.
Inside The Panama Papers
The Malefactors of Mossack Fonseca
Meet The Dutchman, the Queen of the South, the Boss of Bosses and other convicted felons and alleged wrongdoers who have benefited from services provided by the law firm.
Inside The Panama Papers
US States Under Pressure As World Pushes For Financial Transparency
May 13, 2016 — Nevada, Wyoming and Delaware are facing growing pressure over their lack of corporate transparency, as the United States and the international community continue to respond to fallout from the Panama Papers.