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Michael Moore

Dedicated Finance and Compliance Professional

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December 8, 2023

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Blog / International Leak Database and its Transparent Solution

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International Leak Database and its Transparent Solution

In the economic history of the world, the international leak databases released by ICIJ turned out to be the first of its kind that exposed millions of confidential financial documents of the 1% filthy rich who stashed their money in foreign tax havens to hide from public scrutiny. Exposing the greed and corruption of the wealthiest elite including world leaders, top executives, politicians, government officials and holding them accountable by revealing their money laundering, tax evasion, corruption, and embezzlement of government funds using shell companies, trusts and secret financial mechanisms, just a century ago, this would have been unimaginable! This is incredible. ICIJ was also nominated for the 2021 Nobel Peace Prize for their unprecedented and remarkable contribution for bursting financial secrecy of the powerful elite.

Tax evasion, money laundering, and embezzlement of public funds hamper the much needed development in poor and developing countries. Let’s take Africa, for instance, $80 billion are lost in the financial crimes by the powerful african elite every year as per reported by the African Union. These stats are jumping high with each passing year as the financial criminals are raising their game and becoming more sophisticated in their tactics.

The sheer scale of conducting journalistic investigations into these millions of secret files is of course, tedious, high cost and sometimes represents playing with the fire scenario. Journalists working on these projects were often harassed. Sometimes people who worked behind the scenes to expose this hidden world of financial secrecy, risked their very lives. However, the rewards were also unprecedented. Trillions of dollars of money held in offshore accounts were revealed. For instance, $5.6 trillion to $32 trillion were exposed by the ICIJ following Pandora Paper Leaks.

Legislation around anti money laundering laws is heavily criticized for being way too lax. It’s rather facilitating the powerful elite to hide their illicit wealth. FATF had to admit that not much is done and there is still a lot of room for improvement to bring new regulations and tighten the existing ones. The Global AML watchdog came up with new revisions to the Recommendation 24 by FATF regarding the Beneficial Ownership of legal entities, to burst the financial secrecy bubble of the wealthy elite by promoting greater transparency. Establishing a recordkeeping of beneficial ownership in each country was advised to have transparent data.

ICIJ did not find anything illegal in most leaked files. However, if something is legal, it doesn’t imply it’s ethical too. Hiding your money in offshore accounts may not be illegal, but it is morally unethical. Abusing lax taxation laws in foreign countries and not declaring all your assets to avoid public scrutiny is absolutely dishonorable and fraudulent.

This image shows How Shell Companies are Formed.

Suggestions are made from all across the globe to apply the ‘No drum, no trumpet’ principle. That is, to eliminate the tax havens in foreign countries that provide tax evading shelters and facilitate money laundering. Even so, the status quo continues to persist, facilitating the ultra rich to get away with cross-border white collar crimes and tax evasion continue to jump high.  AML laws in certain countries may restrict small to moderate levels of tax evasion. The filthy rich tax-allergics, and financial fraudsters, nonetheless, are still making the most of secret financial mechanisms facilitated by offshore shell companies.

Offshore account implies assets sent and kept outside in a foreign land away from the home country of beneficial owners by creating a complex web of secret financial mechanisms in the form of discreet shell companies that makes them invisible from the eyes of regulators and, and at the same time, lets them control their assets as well. Offshore service providers help them set up multiple layers of shell companies that makes it hard to trace down the ultimate beneficial owners. These offshore services providers then charge their filthy rich clients the fees depending on the complexity of the organization required to hide their assets. Arrangements are set up in a way where assets are concealed from the eyes of regulators, creditors, law enforcement agencies, and sometimes family members too. It all depends on paying more and delivering more confidentiality to their rich fraudster clients.

This image Shows Why Tax Havens Can’t be sanctioned.

Prior to the international leaks of confidential documents by organizations like ICIJ, the general perspective was that this fraudster business of hiding illicit money by the powerful ultra rich was only going on in a few certain places like some small islands. However, leaks like Pandora papers blurt out that bubble. It turns out that the shadow economy established by the powerful white collar criminals is running in all corners of the globe, even in places like the U.S and Western countries who are the pioneers of financial regulations in the existing world order. The biggest banks in the world and some multinational firms were also exposed. The biggest banks in the world and some multinational companies were also exposed in facilitating the ultra rich to hide their wealth, suggesting that this complex web of financial wrongdoing is way more widespread than most of us could ever believe.

Pandora Papers 2021

The recent release by the ICIJ in 2021 also known as the Pandora Papers which comprised over 11.9 million of secret financial files of the 1% filthy rich exposing 14 offshore service companies that offered their business services to powerful elites in 38 countries. This database leak just like its predecessors also proved to be a bombshell in the financial world exposing 29,000 tax allergic ultimate beneficial owners and their 27,000 trust, foundations and companies and them paying millions of dollars to these offshore service providers to hide their trillions.

This 2.94 terabytes of catastrophic data was released in the form of spreadsheets, images, and emails and more.

Paradise Papers 2017

Back in 2017, ICIJ investigated 13.4 million confidential financial files, which is 11.4 terabytes of shocking data exposing 290,000 people from 19 secrecy countries in the form of government. Paradise papers also proved to be an earthquake for the powerful elite and their aftershocks are still being felt in the financial world.

Bahamas Leaks 2016

Just a year earlier to 2017, Bahamas Leaks came up with 1.3 million explosive secret files on the financial wrongdoing of powerful ultra rich. A German newspaper Süddeutsche Zeitunghese files were the first to get hold of them whereas International Consortium of Investigative Journalists ICIJ and their media partners from various organizations investigated and worked on them. This data exposed 175,000 Bahamian firms, foundations and trust along with their directors and beneficial owners.

Panama Papers 2016

One of the most explosive leaks by the International Consortium of Investigative Journalists (ICIJ) was the Panama Papers. German reporters from news firm ‘Süddeutsche Zeitung’ got hold of these secretive documents through anonymous sources. They collaborated with ICIJ suggesting a global investigation should be conducted to analyze these complex sets of files exposing the financial frauds by the global rich. Panama Papers are basically 11.5 million secret financial files which was fundamentally the client record and database of a Panamanian law firm that has been helping the filthy rich of the world to set up confidential and difficult to detect foundations, trusts and firms. It is 2.6 TB of data.

Even after a period of seven years, Panama Papers still continues to ruin the sleep of the richest rich that took complete advantage of the offshore shadow economy and let their greed take over the world. Around the world, 1.1 billion out of 6.1 billion people are trapped in acute poverty conditions in multifaceted manner, and this is happening for a reason. Tax evasion, corruption, embezzlement of public funds and trillions of dollars of money laundering steals the funds that should have and could have been used in development projects to lift up 1.1 billion humanity out of poverty.

The Panama Papers caused huge public outrage that compelled the governments in countries like Italy, Belgium, Germany, Australia and UK to set up investigative committees to recover the lost funds. Some of them were able to recover millions of public funds in different currencies due to the investigations propelled by Panama Papers.

The government of Panama dismissed the leaks, referring to them as fake and conspiracy to damage the global reputations of the country. However, they later agreed to share information foreign taxpayers information with the international community.

As for the regulatory authorities, the encouraging news is, there are credible Leaked Documents Screening Providers that offer Leaks Database Monitoring Services These screening tools can be employed to screen the International Leaks Database to scan and scrutinize millions of leaked documents regarding tens of hundreds of offshore service providers exposing the powerful politicians, government officials, and top executives that engaged in financial crimes like money laundering, tax dodging, embezzlement of public funds and kleptocracy.

These innovative hi-tech tools that specialize in Leaked Documents Monitoring can help the financial regulators to effectively trace down the hidden wealth and financial wrongdoing by people in the shadows.

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