President Juan Carlos Varela announced the creation of an independent expert panel tasked with improving transparency in the offshore financial industry (FT), following the leak of millions of documents this week that exposed the nexus between powerful global elites and offshore financial dealings. The committee, which Varela said would comprise "domestic and international experts," will review the country's financial practices and recommend measures, to be shared with other countries, to improveoverall financial transparency (VOA). Meanwhile, world governments have been under mounting pressure to prevent tax avoidance since Sunday's leak of the so-called Panama papers. The European Commission's taxation chief called on the Union totighten tax rules (Politico), and the United States is reportedly planning to require banks to identify the owners of shell companies (NYT).
"The wealth of the world's shell companies is not in Panama or in the British Virgin Islands: it's invested in New York real estate, in U.S. bonds and equities, and in Europe too. The main way to fight the abusive use of shell companies would be to find who owns this wealth, by creating comprehensive registries recording the beneficial owners of U.S. real estate and financial securities. This would be a powerful way to promote financial transparency, fight money laundering, the financing of terrorism and tax evasion," writes Gabriel Zucman for the New York Times' Room for Debate.
"Ironically, the leak comes at a time of reformist zeal. Last year Panama’s Supreme Court ordered the arrest of Ricardo Martinelli, president from 2009 to 2014, who has been accused of illegal wiretapping and embezzlement (he has denied the allegations). Panama has been praised for passing a strong anti-money-laundering law last year, though it remains to be seen if this will be rigorously enforced. The fear in Panama is that such improvements are being ignored in the rush to traduce the country for the actions of one business," writes the Economist.
"Some of the activity uncovered in the Panama Papers will turn out to be illegal. But if past is prologue, then the majority of what we learn from the leak will merely be embarrassing for those exposed—showing them to be opportunistic and perhaps unethical, but not criminal. And that is why many of the people named in the documents are unlikely to see the inside of a courtroom concerning the services that Mossack Fonseca provided to them: not because they have the power now to quash prosecutions (with some notable exceptions!), but because some time ago they had the power to hire expert advisers who carefully designed their tax-avoidance (or law-avoidance) strategies," writes Brooke Harrington for the Atlantic.
CFR-Daily News Brief