International | The “Panama Papers” – A Legal Tsunami in the Making
As reported in the world press this week, the Panamanian law firm of Mossack Fonseca was recently hacked by an unknown group, who has obtained access to over 11.5 million confidential documents of the firm, amounting to some 2.6 terabytes of data. As of today’s date, the press has reported that the unknown group has publicly disclosed the confidential information relating to in excess of 215,000 “offshore” companies, involving more than 14,000 people related to the “offshore” companies.
The world press has also reported this week that several foreign governmental investigative agencies and taxing authorities have commenced investigations into these “offshore” companies and the principals or beneficial owners of these “offshore” companies. Further, many of the countries initialing investigations are members of the Egmont Group (a group of countries with officially approved access to the United States “Financial Crimes Enforcement Network” (FinCEN) data base). As authorized Foreign Financial Intelligence Units (FFIUs) (ie: foreign governmental investigative agencies) of the Egmont Group countries, these foreign agencies have the right to access and use the information maintained in the FinCEN database. See the following link for a complete listing of the Egmont Group countries - http://www.egmontgroup.org.
Many of these countries may also signatories to bilateral FACTA Intergovernmental Agreements with the United States, granting them additional access to information about the financial accounts and assets in the United States of foreign persons and entities.
In view of the foregoing, it is foreseeable that both foreign and domestic individuals with ties to disclosed “offshore” companies, which own or maintain property, assets, investments or financial accounts within the United States may become the subject of investigations by both domestic and foreign governmental investigative agencies here and abroad. In the event the investigations reveal violations of United States or foreign tax laws, such individuals may become subject to audits and actions from the IRS and foreign tax authorities. Moreover, in the event the investigations reveal violations of the criminal laws of the United States (including the Foreign Corrupt Practices Act and the Money-Laundering Act) or the criminal laws of foreign countries with jurisdiction, such individuals may also become subject to criminal prosecution in the United States and abroad. And, in such event, the assets and financial accounts of such individuals may become subject to confiscation pursuant to actions for Civil Forfeiture by the authorities of the United States.
In essence, the reports in the world press are merely a harbinger of the tsunami of civil, administrative and criminal legal actions that are about to unfold, and that will directly affect many persons with “offshore” companies and assets.
In the event you become the subject of an investigation, domestic or foreign, it is recommended that you immediately seek legal representation within the United States and in any foreign countries that may have jurisdiction over you, your “offshore” company and your foreign assets.
In the event you would like to discuss these issues further, or in the event you would like to schedule a confidential consultation with Walroth-Sadurni Law, please feel free to contact us. Our contact information can be found in our website, at www.walsadlaw.com.