The UK regulator sent a letter to around 20 businesses instructing them to carry out their own investigations into potential ties to the leak of millions of documents, dubbed the ‘Panama Papers’, exposing the tax-evasive practices of institutions, politicians, public officials around the world.
The exposé followed a year-long investigation into the emails, bank records and client documents spanning from 1977 to 2015 by German newspaper Süddeutsche Zeitung – which were then passed on to the International Consortium of Investigative Journalists (ICIJ), the BBC and the Guardian.
Due diligence
The FCA has demanded financial companies detail what action they are taking in the aftermath of the leak, reminding recipients that any subsidiaries or branches located outside of Britain are still subject to UK rules and regulations when it comes to monitoring client accounts and researching customers.
In a statement, the FCA said: “The FCA has written to a number of firms about this issue, including those on our Systematic Anti-Money Laundering Programme, and we are working closely with a number of other agencies who are also looking at this.
“As part of our responsibility to ensure the integrity of the UK financial markets we require all authorised firms to have systems and controls in place to mitigate the risk that they might be used to commit financial crime.”
According to data uncovered by the ICIJ, more the 500 banks across the world including HSBC, Coutts, Rothschild, UBS and Credit Suisse have worked with Mossack Fonseca to set up nearly 15,600 shell companies, allowing clients to avoid tax by hiding their money abroad.
‘Panel of experts’
In a televised address on Wednesday, President Juan Carlos Varela said that Panama will create an international ‘panel of experts’ to help improve transparency in its offshore financial industry.
The head of state defended his country against what he called a “media attack”, accusing wealthy countries of unfairly scapegoating him following the leak.
