The Panama Papers
Within the last fortnight we have seen the leak of millions of tax and financial records of the wealthy and elite, shining a spotlight on tax evasion, sneaky techniques and criminal activities.
Why is the leak such a big deal?
A breach in the notorious Central American law firm Mossack Fonseca has seen more than 11.5 million documents released and investigated. Teams of journalists and tax experts are slowly combing through the evidence which spans over 40 years of dealings.
At present the Australia tax office is in investigating over 800 Australian residents whose names have been leaked.
Just in this week the evidence has become apparent that Mossack Fonseca has thwarted Australian regulators and police inquiries, acted for people accused of embezzlement and fraud and lobbied to prevent more transparent tax laws.
Evading tax and laundering money would not be possible without the use of a shell company. A shell company only exists on paper and has no office or employees. The address of such shells is that of one of the services setting up the tax havens.
A notorious example is Ugland House. This five storey building in the Cayman Islands is supposedly the business address of 12,000 corporations… and growing every day.
Shell companies are legal until they are used for illegal purposes. Setting one up is as easy as ABC with many offshore service providers providing easy access with online applications at a low cost of $2,000.
While hiding your wealth is not against the law, evading tax and laundering money through these companies is.
With terrabites of data still to be analysed there is no doubt that what we know now is only the tip of the iceberg. Only time will tell you has followed the rules and who has skipped Go and collected their $200.