Financial Secrecy in Panama and Beyond

GOTTCHA......all those whom Bernie Sanders has called ....tax evanders.

and this...my dear devoted Fourth Estate...let's say...bound to as the AMA
Hippocratic Oath..to their honored profession...well NYTimes...Editors...this
is the same logic...
Are you bound as those in the medical profession...to ....reporting/telling
the TRUTH....
If so...Do so...the .01 percent hoarders of international gross income are
stashing away ...multi $$$$ in untaxable PRIVATE...not public..funds.
So...do your job...as Pulitzer would ...as Edward R. Morrow would ...as
others fine journalists would....because......if you do not reveal...the
tax dodgers....world wide........You the Editors ...simple have ...FAILED.

I hope that you are not too...ashamed to print this... I will wait...

When is the NYT going to champion the publications of all the names of American and Canadian companies and people found in the 2.4 GB of leaked M-F data? You have this information. Divulge it.

You said, and we've known it for a long time... "The United States remains one of the world’s top tax havens." That should be the title of the article.

As a lawyer for many years, I am perplexed by the urban myth that Delaware, Nevada and Wyoming are tax havens, and that all you have to do is incorporate in those countries to avoid tax. I am equally confounded by the urban myth that those states are somehow unique in masking the identity of shareholders.

First, using a Delaware, Nevada, or Wyoming company to avoid taxes simply does not work. Anyplace you would reasonably want to invest your money (banks, mutual funds, stocks, corporate bonds, brokerage firms, etc.) is going to send the IRS a 1099 reporting income earned by the company. Try setting up a corporation to hold your assets and see what happens when, to avoid paying tax, you a) fail to file a tax return, or b) file a tax return that omits income reported to the IRS on 1099? We have federal prisons to deal with people who do that.

Second, there is nothing unique about the fact that shareholders names are not publicly known. There is no state, to my knowledge, that makes shareholders names public. Yes, some states promote this fact on their websites. However, its nothing but marketing drivel intended to induce the uninformed to form corps in their state so they can reap corporate fees.

Third, while you and I do not know the names of LLC shareholders, the IRS certainly does, and that's who counts. Its required disclosure on LLC tax returns. For corporations, disclosure of shareholders is not required unless a dividend is paid, but corps pay their own tax.

All of this handwringing is a sign of a deeper problem: we take government and governance so much for granted that we're spinning our wheels about tax compliance, but we're missing the larger issue: Why is there so much evasion in the first place? When did the Self become more important than the Community? And its apparently not just an American phenomenon. Everywhere, it seems, withholding funds from civilization (the expression of government and governance) is seen as harmless if you can get away with it. Industrial-sized tax avoidance is a symptom of a cynicism that could destroy us, if left unchecked.

If we want to truly end one of the worst abusers of secrecy by banks then the justice department needs to investigate the management of trusts by banks and any other financial institutions. Trusts are routinely abused and run into ruin by trust officers, bank administrators, trustees, and others. Trustees hide behind laws that protect them even when there is a fiduciary responsibility by the trustee. Hundreds of billions of dollars are parked in trusts. Trust officers who are given the power of sole discretion, usually in the case of widows, orphans or incapacitated persons routinely act in their own financial interest and not the interest of the beneficiary. Even a primary beneficiary can be denied rightful benefits because the bank may fear being sued by others. What is the point of being a fiduciary if fear of being sued by a third party becomes the primary concern of the trustee. There are no laws, no reviews and no rights in the course to protect beneficiaries. A state chartered bank does not come under federal law and can also escape review or accountability through that loop hole. Financial secrecy begins here in the United States. Trusts, wills and estates would be a good place to begin to clean house. No beneficiary should live in poverty or have to beg for benefits when parents leave them millions in trust. In PA one large, $17 billion institution is sitting on hundreds of millions in trust and refuses to routinely disburse earnings or divulge all fees charged.

this place offers not just an account, but a your very own bank

and by spiriting away $ 70 bill from russian oligarchs proves their ingenuity

bet th climate is sweet too

One notorious offshore centre, in the middle of the Pacific Ocean, is the island of Nauru. There, if you have a spare $25,000 (£16,600), you can set up your own bank and enjoy life with little or no regulation. It is even estimated that almost 400 banks operate there from the same government mailbox. And it was in Nauru, in 1998, that according to the Russian Central Bank, $70bn (£46.6bn) vanished never to be seen again.

Apparently, prime minister of UK - David Cameron - had shares in his father's offshore trust fund, which he sold for a capital gain of about $18,000 BEFORE he became the prime minister. Now, Snowden (yes, that one) is calling on the British to rise against Cameron and demand his resignation. How ironic! The president of Russia, Putin, is implicated in Panama papers and Snowden will have credibility if he demands that Putin leave. But then, he would have to leave before Putin goes, and the brave warrior has no sanctuary. Hypocrite Snowden.

One of our 'allies' - Poroshenko of Ukraine - is also implicated in Panama papers and the silence of Obama administration in calling for accountability from our 'enemy of enemy' is deafening.

Has anyone mentioned an economic boycott of Panama -- buy your coffee and bananas elsewhere?

Same for any other countries refusing to cooperate with the international community on regulating/monitoring such matters?

Guess I'd put Switzerland in that pot too. Long history of legal compliance, but ethical abuse.

The obscenely-rich buy our politicians, run this country and won't even pay their fair share of taxes to support the United States government and its citizens. Panama is just the teeny tip of a vast iceberg of places to hide money that stretches around the world and is secretly sinking many ships of state.

Yet these greedy oligarchs are the first to line up --and receive-- billions in corporate welfare from Uncle Sam. And that's in addition to the hundreds of billions they suck up through their ownership of the military-industrial and prison industrial complexes, Big Pharma, Big Agriculture and Big Media.

Unless We the People rise up and wrench control of our elections --federal, state and local-- from the moneyed interests, America will become one gigantic feudal society ruled by the Koch brothers and their ilk, with ordinary people the serfs whose only purpose is to do the bidding and serve the interests of their wealthy lords.

And that is one important reason why tens of millions of us support Bernie Sanders, the only Presidential candidate in decades able to raise enough campaign money from small donations to run for the highest office.

The plutocrats and their minions hate and fear him. And that includes a very significant portion of the media in this country.

He simply would not go away as they had hoped and expected.

Now the knives are out. It's going to get bloody, especially if he continues to win or even come very close in the state primaries still to come.

And take a look at Wyoming, protecting its shell operations as good for the economy!

"dismantle the tax havens that have allowed the world’s richest people to avoid paying taxes."

Odd - because the top 1% of US taxpayers pay nearly half of all US Federal Income taxes (Andrew Rosenthal and the NY Times Editorial Board in a nod to Bernie Sanders type of soundbites seems to think these taxes are being avoided)

The ability of honest persons to keep their financial affairs confidential is much too important to give up just so policemen can catch crooks' money. Catching the money may make policemen feel good but the crime has been committed and the damage done.

A side issue is that U.S. tax law and IRS bureaucrats are so corrupted by special interests and political bias that tax evasion is not the least bit unethical even if technically illegal.

Wonderful! The financial disclosure flag flies high on the mast of governmental investigations and the results of disclosure of the greed and stealthiness of the wealthy is stirring the anger of the public as well it should.

The Panama Papers have managed to make the world aware of the raw greed involved.
Will people like the Koch's and the Adelson's and their ilk actually care of even fear such disclosures? Can Americans count on our Congress to pass laws that take these scoffers to task?

The real test before us will be determined by how long the Papers draw a crowd and the resultant public indignation. I doubt the wealthy care that much. It won't take them long to find another hidey hole. Papers have managed this in just a week before the public.

Will it last long enough to bring about change?

In the list of 96 OECD nations which are expected share banking information, the USA is conspicuous by its absence, and FATCA requires compliance of other regimes in reporting to the treasury if a US citizen or a shell company operated by a US person has banking accounts in those countries but the US jurisdictions such as Delaware, Nevada, South Dakota, and Wyoming rival Panama in allowing shell companies and trusts operate with impunity.

In fact, the lawyer from Mossack Fonseca has stated that he does not set up shell accounts for Americans because Americans can set up such accounts in their own states such as Nevada and Delaware. Mossack Fonseca is operating from those two states in USA as well.

The footnote to the OECD memo indicating which countries are expected to comply with reporting has a footnote about USA htat reads: "The Model 1A IGAs entered into by the United States acknowledge the need for the United States to achieve equivalent levels of reciprocal automatic information exchange with partner jurisdictions. They also include a political commitment to pursue the adoption of regulations and to advocate and support relevant legislation to achieve such equivalent levels of reciprocal automatic exchange."

US is POLITICALLY COMMITTED to reciprocal reporting of shell accounts operated by foreign citizens in Nevada and other tax havens within the USA, but is not doing so now. Who knows, ISIS may even have a shady account in one of these US jurisdictions. Shameful.

Why does this article not make clear that the US has NOT signed onto the OECD either? Isn't that a bit disingenuous?

Until governments around the globe, including the US, start putting these wealthy scofflaws in prison with lengthy sentences, this is just a lot of huff puff!

Obama could have required Panama to reform its banking system as a precondition for including it in the trade deal with South Korea and Columbia, but as usual Obama did not insist on it. For some reason, he wanted the agreement too badly, so he lost his bargaining power. It seems odd that he did so because Panama needed the deal more than we did. It makes one wonder if Obama and his team know what they're doing. Bernie Sanders denounced the deal, but Hillary voted in favor of ratifying it. Now after this scandal comes to light Obama is suddenly asking for reform. But it's too late. He had his chance but he blew it. In the meantime Bernie is coming into his own as the man who holds to principle and speaks up for what is right.

A nation whose actual religion is the worship of money would have such devices as Mossack Fonseca to resort to, wouldn't it? One tires so quickly of the hypocritical self-righteous tone of this paper's coverage, particularly because the NY Times was scooped by the Sueddeutsche Zeitung weeks ago, and now everyone has to cover the story because it's too big and bad to ignore. In a city like New York, which exists to exploit the unwitting rest of the world and trumpet its ostentation upon the success of that exploit, the tone of these condemnations rings false, more like poorly concealed envy.

But Hillary said the Panama free trade agreement would be good for America when she pushed so hard for it as Secretary of State. I guess we know now why Wall Street paid her over $200K per speech after she left government. If I'm not wrong about that, why won't Hillary release the transcripts? By the way, Senator Sanders was strongly against the Panama agreement when it was being debated and, once more, he was proven right and Hillary was proven wrong.

Really disappointing coverage by the Times. Who will out the dozens of US-based hedge fund and private equity fund managers and investors who directly or indirectly own shares of offshore funds. Ownership may not be illegal, but the issue is that this is one more huge tax loophole for the super-rich that the federal government has permitted to persist, even through the term of President Obama. Could it be that high level Treasury and IRS officials don't want to touch this issue lest it impair their chances of joining the super-rich after they leave the government?

Finally a bit of perspective in this matter.
All Panama wants is fair treatment by a group of bullying countries that want to impose their "standards" while harbouring big sums of money in The Netherlands, Luxembourg, Switzerland, Malta, all UK territories ( I mean, where to start), etc. While we are fine with Delaware, Nevada and Wyoming incorporating companies too and keeping secrecy and privacy protections, they want Panamanians to surrender by using a media dirty war.
Like the article says Panama - and other jurisdictions as well - have made major improvements to comply with requirements. But now the OECD is looking for the destruction of our financial system outside of the UN Global Forum and the WTO, by using the flag of "corruption" when the banks and the legal systems where the corporations operate like BVI and Nevada ask no questions whatsoever about the source of the funds. There are no banks in Panama involved in this "scandal". Let's talk about Credit Suisse, UBS, Societe General, RBS, HSBC all involved in scandals in the last few years since the crisis exploded. They ask no questions either.
Finally let's be honest, if Panama is a tax haven - with up to 25% on personal income and corporate tax- then The Channel Islands (Man and Jersey), the Cayman Islands, Bahamas, Ireland, Liechtenstein are Tax Nirvana, but yet no one asks questions about it. Yet the name of Panama gets trashed all around. We want FAIR RULES for everyone, yet we are the bad guys.

Why is the concept "shell company" even legal or tolerable? It is a fake entity set up to cheat on taxes and to launder money. It has no other purpose. Am I right? No banking expert here...

You point to Panama's failure in cooperating with the 132 nations that have agreed to the OECD common reporting standard. Just one problem: the United States itself has refused to cooperate with that standard, choosing to go its own way with its own set of rules. Furthermore, according to its own set of rules, the United States has deemed Panama to be compliant with its information sharing demands, while expressly reserving the right not to reciprocate.

Such a stern condemnation for Panama and not a word concerning the fact that the only other contry that refuses to share information is the US, american exceptionalism at its best!

The other thing is the sanctimonious positions of the French and the Editorial board of the NYT.
In the cover today it reads: "While most nations have agreed to share information to root out tax havens, Panama has dragged its feet". Yet in the article they write:
"Officials in Panama have pointed out that the American banking system has not been a model of transparency either. They are right. The United States remains one of the world’s top tax havens. Several states have eagerly attracted foreign capital by making it easy to set up shell corporations and other legal entities that hide the identities of the owners."
So it looks to me this is a double standard in journalism.
The NYT (and most media around the world) uses "Panama's reputation as a tax haven" a punching bag while overlooking things like this for example.
http://m.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10642287

If we are going to go to trash Panama's name for what happened back in the 1980's and 1990's (right after we were bombed by the US Army) then let's go a check the financial regulations of the US, France, Switzerland, Luxembourg and the British Virgin Islands back then also, when all players were playing by the same rules.

Panama is hardly the problem. It may not have signed all the data sharing agreements, but the real problem is that data is just not there, and won't be there until nations establish financial registries that track the beneficial owners of all financial and real assets. Britain has recently established such a registry, and France has long had one. The United States is the outlier on this issue, and the central bastion for financial and corporate secrecy.

A "loop hole" or a "tax haven" are how sharp and not so sharp lawyers, accountants and lobbyists make their living in malevolent politically bipartisan conspiracies with their selected elected officials and our government and country.

The federal income tax code is a monumental shrine to deductions, subsidies, credits and lower tax rates. But only for certain sacred selects industries, transactions, sources of income, business entity structures, contracts and securities.

Law is gender, racial, colored, ethnic. sectarian, socioeconomic political history plus arithmetic. Laws are not logical nor fair nor just nor moral nor objective. The law picks winners who benefit from loop holes, havens and technicalities. Sending our jobs and their money overseas is exactly the way the system is intended to work and for whom it is intended to work.

"If the law supposes that," said Mr. Bumble, squeezing his hat emphatically in both hands, "the law is a ass--a idiot. If that's the eye of the law, the law is a bachelor; and the worst I wish the law is, that his eye may be opened by experience--by experience." from "Oliver Twist" by Charles Dickens

"It depends upon what the meaning of the word 'is' is". Mr. Hillary Diane Rodham Clinton

"Round up the usual suspects." Captain Renault from "Casablanca"

The US has a regime of laws including world wide taxation and taxation upon giving up one's citizenship that make it unique in the world. There are few ways for an individual to shield income from the US government without breaking the law. The vast majorities of countries tax laws generally are centered around taxing local income allowing people to shield income offshore - generally not allowed in the US. For the complaints by populists in the US, wealthy in the Europe and elsewhere do not get taxed. The real overseas issue in the US is a corporate tax structure which taxes US domestic companies at the highest level in the world while multi-nationals are encouraged to off shore to avoid domestic taxes. The biggest issue is less data sharing and running after US citizens, its corporate tax reform that should drop the notional rate in half but tax worldwide. The numbers are far greater and it would eliminate the incentives provided by our government to offshore.

All governments, everywhere, and always want to have the private affairs of their citizens within reach. Panama and perhaps some other folkloristic countries of the type of Upper Slobbovia or Evalonia have discovered a good source of revenue in bank secrecy. The latest revelations of "Panama Papers" are a proof that nothing can be regarded as secret.

Apart of the question of tax evasion or avoidance, existence of bank secrecy as such is fully consistent with the concept of privacy. There are many reasons for an individual to want to keep his patrimony in secrecy, and far from all of them are against the tax laws.

This is a snowflake on the iceberg. There's probably tens of thousands of these firms. The same lawyers and banks that hide money for the mega rich so they can avoid taxes and debts, are also used by the CIA, international smugglers of weapons, drugs and diamonds, and terrorists.
The billionaires write the laws to hide their ill-gotten wealth and it also protects violent criminals and terrorists. (Ill-gotten? A few hundred people have as much wealth as half of the world. There is no way that they are as productive as 3.5 billion people, so they must have gotten it by fraud.)
Then THEIR global corporate mass media, which generally determines which candidates are "electable" by only covering those that will protect their power (like the Clintons and the Bushes), so that these laws are rarely fixed.
The CIA, under George Herbert Walker Bush, put Noriega in control of Panama, while he was a notorious drug kingpin. Then when he started to balk at U.S. control President GHW Bush sent in the military to "arrest" him on drug charges. Then we installed his replacement.
Then we signed a Panama Trade Deal with Secretary of State Clinton's help that made secret banking easier there. (That's the kind of experience we need in the White House?)
Even States in the U.S. are offshore account havens. The entire world is being taken over by billionaires and their global corporations. They divide us by race and gender and ethnicity, pitting the middle class vs the poor, so we blame each other.

Didn't Tom Cruise, Jeanne Tripplehorn and Holly Hunter take care of this back in the 80s when they caught Gene Hackman and his fellow law partners red handed?

By all means, let's ignore Delaware, Montana, Nevada, Wyoming, and focus on Panama. Something about motes in other's eyes, beams in our own.

The automated system for sharing banking information across national borders you speak of will go into force in the EU and Switzerland in 2018. This information will also be provided to the US authorities at that time. The US, however, will not be reciprocating in kind in the near future although, as you mention, the US originally agreed to. In that sense, the US is very much like Panama except, unlike Panama, it can strong arm smaller European countries to heed its bidding.

My hope is that this story has legs. As long as the public is aware in detail just how bad tax evasion, both legal and not, has become the outrage will build that will override the lobbyists that will try to slow, evade, and dilute any honest effort to turn this around.

Your headline should read "Financial Secrecy in the USA and Beyond".

You come across as arrogant .... suggesting the rest of the world apply procedures the USA refuses to.

America is indeed the worst of the worst with Deleware, Nevada and Utah outdoing the Panamanians by a tenfold.

Clean up your own yard before complaining about your neighbours.

Apart from the governance and social policy deficit the other main reasons responsible for the skewed income and wealth distribution in societies across the world is an extractive tax regime that encourages tax evasion and money transfers abroad through anonymous offshore banking and financial transactions of dubious nature, mainly by the high and mighty. It's this unaccounted money and idle capital, estimated roughly to the tune of 30 trillion dollars, that's circulating through the world's major tax havens and money laundering destinations like the British Virgin Islands, Cayman, Panama, Bahamas, Bermuda, Mauritius and many other locations known for lax tax laws and weaker legal and financial regimes. In order to prevent this theft and plunder of public money by the mighty and rich, and to bring transparency and accountability in the present shadowy international financial market, it's imperative that a legally mandated international treaty/convention is strived for that makes it mandatory for the nations to abide by the International standards of banking and financial reporting, tax evasion related information sharing on demand, and even extradition if required under the economic/financial offenses. Such real time intelligence sharing about tax evasions or money laundering through the offshore shell companies, crucial to clean up the global financial system, is not beyond the realm of possibility if leveraged through advanced information technology and will. .

"The United States remains one of the world’s top tax havens."

This is an understatement. The United States remains *the* top tax haven. It has time and time again shown no interest in helping other countries.

Fatca is a case in point. Foreign banks, at great expense (billions and billions have been spent), are being forced to hand over data on their American account-holders. The United States, in signing agreements with other governments to ensure this sharing, promised reciprocity. But there is no reciprocity. And the U.S. has no intention of ever allowing reciprocity.

I have a bank account in the United States. My bank doesn't know the first thing how to share this data with France. It does not share this data with France. It will never share this data with France. The only one sharing this data with France is myself. But presumably there are many, unlike me, who do not.

The American reaction to this is: those corrupt French, using American bank accounts. But when it comes to Americans who have accounts in France the American reaction is: those lousy French banks, allowing Americans to hide their money. This, I'm afraid, is the definition of hypocrisy.

"Share information?" What information would the US be willing to share with Panama? None.

"Help us collect our taxes" is what is meant.

The US allows much of what Panama has done. We have a huge industry of shell corporations and vast secrecy protecting wealth.

We specifically agreed to much of what Panama is doing in the "trade" treaty with them which covered a lot more than trade. We knew that too, because at the time Bernie denounced it on the Senate floor for exactly that, while Hillary voted for it in the Senate. No surprises here.

The NYT endorses the candidate who voted "Yes" for this, for exactly what this Editorial now complains about. That endorsement is against guy who said at the time it mattered what the NYT now says when it is too late.

Sorry, my cynicism is showing on this.