Offshore centres distance themselves from Panama

The leak of 11 million confidential documents from Panamanian law firm Mossack Fonseca allegedly showing it helped clients to avoid tax, launder money and dodge sanctions has spurred other offshore domiciles to defend their position on financial crime.

Cayman Finance, a body established to promote the island's finance industry internationally, is the latest to issue a statement to distance itself from the activities outlined in the Panama Leaks.

“Cayman is not a secrecy jurisdiction,” said Jude Scott, chief executive of Cayman Finance. “One of the best weapons against illegal activities and tax evasion is effective transparency and cross border cooperation. This is where the Cayman Islands has a proven track record.”

The comments from Cayman Finance follow similar statements issued by the financial bodies of both Guernsey and Jersey this week.

“[Guernsey]'s recent MONEYVAL report shows that we have in place a highly effective anti-money laundering and anti-terror financing regime. Guernsey also has the support of independent organisations such as the OECD and IMF who regularly reference Guernsey as a cooperative jurisdiction and one that is active in its commitment to the practical implementation of tax transparency and meeting international standards,” said Lyndon Trott, Guernsey Finance chairman.

Geoff Cook, chief executive of Jersey Finance, welcomed the calls for greater transparency in offshore locations to counter money laundering and said that although Mossack Fonseca has a small office in Jersey, there is no suggestion that any illegal activity has taken place on the island or involved Jersey-registered companies, according to the statement.

“While no jurisdiction can ever guarantee it will never be used by a corrupt minority, we are confident we have world class anti-corruption measures and that few work harder than Jersey to stamp out illicit activity,” added Cook.

While industry participants spoken to by pfm have been clear to draw a distinction between reputable and non-reputable offshore jurisdictions, there is clearly a risk that repeated uses of phrases such as “tax haven” and “shell company” in connection with criminal activities such as tax evasion and money laundering could risk causing reputational damage to all offshore financial centres.

“Even though the media coverage makes no mention of the Cayman Islands,” said Scott, “The need for a clear understanding of the positive role international financial centres play in the global economy could not be stronger.”