Contributed By: Vladimir Feldman - Financial Crime Analyst
Posted By: Monte Friesner - Financial Crime Intelligence Analyst & Consulaire For Wanted SA
While many of the news articles detailing the information available thus far, in the Panama Papers scandal, it is important not to lose sight of the fact that the law firm of Mossack and Fonseca chose not Panama, as it preferred jurisdiction for corporate formation, but the British Virgin Islands (BVI). MF used, or should we say abused, the BVIs bearer share laws, which allow the names of Beneficial Owners to be omitted, so that its criminal clients could open accounts, without fear of being named & shamed.
Looking at the history of MF corporate formation, between 1980 and the present, we see:
(1) That MF started out forming companies, more or less exclusively, in Panama.
(2) By the late 1980s, the BVI had become MFs jurisdiction of choice. Panama formations would thereafter be only a small percentage of those created by the firm.
(3) In 2004, MF was forming over 6000 companies, annually, in the BVI.
(4) BVI corporate formation would dominate at MF, through 2015.
Please note that, to a much lesser extent, the Mossack law firm also formed shell companies in these jurisdictions:
(B) The Seychelles.
(D) The Bahamas.
Many of the BVI companies formed by Mossack and Fonseca intentionally maintained bank accounts in other tax haven countries, making routine identification of corporate officers, directors, and of course, owners, challenging, and basically impossible. The BVI was Mossack's shell company jurisdiction of choice. Remember that the next time some lawyer tells you that his client's company is incorporated there for legitimate, tax planning, reasons. If the client does not maintain an actual commercial business in the British Virgin islands, with a physical location, think again.