Global Authorities Continue Pursuit of Tax Evaders and Money Launderers Two Years After Pandora Papers Leak

Two years after the International Consortium of Investigative Journalists (ICIJ) published the Pandora Papers, authorities worldwide continue to investigate, prosecute, and legislate against tax evaders, money launderers, and the professionals who facilitate them.

The 2021 Pandora Papers investigation, led by ICIJ, involved a cross-border team of more than 600 reporters analyzing 11.9 million leaked documents from 14 offshore service providers that specialized in setting up shell companies in tax havens. The documents revealed the financial dealings and hidden assets of politicians, celebrities, businesspeople, and criminals in over 100 countries.

Authorities in various countries have taken action based on the Pandora Papers findings:

1. Germany: Authorities in the state of Hesse acquired Pandora Papers data and set up a task force to review the documents. They are coordinating with law enforcement in multiple European countries to identify suspects of tax fraud and other crimes.
2. France: The financial prosecutor’s office requested international assistance to investigate former Czech Prime Minister Andrej Babis’s acquisition of a luxury villa in Mougins, near Cannes, using offshore shell companies. Babis lost national elections following the revelations.
3. Peru: Authorities in Peru launched an investigation into three members of the Catholic religious group Sodalicio de Vida Cristiana for suspected money laundering and using offshore entities to hide profits.
4. India: Indian financial authorities seized high-end properties and assets belonging to at least five businessmen with offshore shell companies identified in the leaked data.
5. U.K.: Tax authorities in the U.K. have begun reviewing potential tax evasion cases uncovered by the international team of reporters. They sent letters to hundreds of U.K. residents named in the leaked data, warning them to disclose overseas holdings or face penalties.

The Pandora Papers investigation has also prompted discussions on legislative reforms targeting enablers of tax evasion and money laundering. In the U.S., lawmakers introduced an amendment to the Bank Secrecy Act to force attorneys, art dealers, and trust companies to investigate clients seeking to move money through the American financial system. However, the Senate later blocked the bill.

In Switzerland, the Federal Council is discussing a new anti-money laundering bill that would impose due diligence requirements on professionals who set up and administer trusts and shell companies for clients. European Union regulators are also scrutinizing intermediaries’ roles in facilitating tax dodging and sanctions evasion.

While some progress has been made, Chiara Putaturo, a tax and inequality expert with Oxfam International, emphasized the need for comprehensive rules targeting all factors that enable white-collar crimes, including weak regulations, low corporate tax compliance, and unethical behavior among professionals in the financial sector.