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#Financial Crime Prevention

From the Panama Papers to people with significant control

International Compliance Association

corruption , Panama , Panama leaks , Panama papers

The Panama Papers have truly put the cat among the global pigeons. What the rich, powerful and famous from around the world have been secretly getting up to offshore makes fascinating reading and the revelations have already toppled one prime minister.

Phrases like shell company and ultimate beneficial owner are popping up in the mainstream media and the spotlight is on offshore holdings as never before. It should be said that Mossack Fonseca, the law firm involved in setting up more than 214,000 offshore companies, denies any wrongdoing  but it’s also true that while offshore shell companies are perfectly legal, they can be a useful tool for money laundering and other illicit purposes.

The story broke at an interesting time for the UK, coming in the same week as the country took a major step towards getting rid of the secrecy around ultimate beneficial ownership that exists all over the world, and certainly not just in exotic tax havens.

Public register

Panama leaksFrom 6 April, all UK companies must maintain a register of people with significant control (PSCs), essentially individuals with a holding of more than 25% in a company or other significant influence or control. From June, they will need to give the details to Companies House, with information made available on a searchable public register. In other words, the real owners of companies in the UK will have to come out into the open and no longer be able to hide behind nominee shareholders.

So it’s three cheers for the UK, which has been championing the idea of a public register since 2013. Or is it?

Dig a little deeper into the Panama Papers and it turns out that when it came to where the 14,000-plus intermediaries they worked with were based, 1,924 were in the UK, only just behind Hong Kong in first place. UK intermediaries – like banks, law firms and incorporation agents – were third behind Hong Kong and Switzerland in the league table for the most offshore company incorporations.

Anti money laundering

Clearly, the UK government is striving to do the right thing but while regimes around the world enable corporate secrecy – including respectable western democracies, like the US – there’s still a long way to go. The UK deserves credit for helping to put the issue on the political agenda though some might think the Panama Papers will be more effective in initiating international change.

These revelations bring into sharp focus the very real practical and ethical challenges facing anti money laundering practitioners and how essential it is that they have the lifelong skills –critical thinking, analytical abilities, effective decision-making – to tackle the threats, risks, and vulnerabilities that are constantly evolving. That’s a big part of the ICA’s qualifications and a key reason anti money laundering and other professionals all over the world choose to study with us.

For more information on the full range of ICA qualifications, including our Advanced Certificate in Practical Customer Due Diligence – which includes issues unravelling beneficial ownership and ownership structures – please visit our qualifications page.

To stay updated on the latest developments in governance, risk and compliance, anti money laundering and financial crime prevention, please follow us on LinkedInFacebook, and Twitter, where you are guaranteed to be notified when our next blog post goes live.


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