follow Leaked records in the Panama papers show how major global banks work hand in glove with a variety of groups within the offshore industry that helps the super rich, politicians and criminals keep their assets and wealth under wraps from the public.
Global banks such as HSBC and UBS are the middle-men in between wealthy clients who wanted offshore shell companies to keep their wealth hidden and law firms like Mossack Fonseca, one of the largest creators of offshore companies in the world.
Over 500 banks, their subsidiaries and branches registered almost 15,600 shell companies with Mossack Fonseca alone, the vast majority of these were created since the 1990s.
According to the records in the Panama Papers, British banking behemoth HSBC and its subsidiaries accounts for the creation of 2,300 of the shell companies. Other big banks proven to be doing business with Mossack Fonseca include Credit Suisse (1,105 shell companies), UBS (1,100), Société Générale (979), the Royal Bank of Canada (378), Commerzbank (92).
Unfortunately it is a great travesty that almost all of the actions of these banks in regards to Mossack Fonseca are entirely legal. Over the past several decades politicians throughout various countries have lobbied in favor of these outcomes, which is why so many people have been able to hide so much of their wealth for so long.
Several investigations, however, into the shady workings of banks and offshore accounts have resulted in positive steps. Credit Suisse pleaded guilty to criminal conspiracy charges in 2014 for “assisting clients in using sham entities to hide undeclared accounts” and paid $2.8 billion to settle out of court. In 2013, Wegelin, Switzerland’s oldest bank closed down after paying the US $58 million for aiding tax evaders. In total, American investigations into banks’ roles in offshore tax evasion has meant 80 Swiss banks have settled with the U.S.
This does not deter the banks, though. Some of the offshore companies created by the banks and law firms were used to mask criminal activity, serving as fronts for dictators, fraudsters and drug cartels.
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The structures UBS created through Mossack Fonseca ranged from offshore companies controlled by Mohammad bin Nayef bin Abdulaziz Al Saud – the Crown Prince of Saudi Arabia, to companies controlled by Roberto Videira Brandão – a man convicted of fraud during the collapse of a Brazilian bank, and Marco Tulio Henriquez – a Venezuelan banker and fugitive charged by the U.S. Department of Justice of money laundering for drug cartels.
HSBC and Mossack Fonseca worked together to assist Rami Makhlouf – the billionaire associate of Syrian dictator Bashar Assad, despite concerns put forward from Mossack Fonseca to HSBC. However, according to the files, HSBC did not see a problem with this despite the U.S. treasury department ordering Makhlouf’s assets to be frozen in 2008, unrelenting, however, the law firm followed suit. Banks such as HSBC see themselves as outside the rule of law, so it seems.
In an attempt to justify their decisions, Mossack Fonseca published a statement saying: Politically exposed persons “do not have to be rejected just for being so; it is just a matter of proper risk analysis and administration.”
According to veteran private financial investigator, Steve Lee, “bank secrecy and secrecy jurisdictions provide opportunities for bad guys to get away with fraud.”
Banks very rarely lose out in these situations, if a client is wealthy banks will usually deal with them no matter how unscrupulous the client may be.
In 2010, HSBC bankers were convicted after they were helping launder bags of money from drug deals through HSBC accounts, HSCB reached a settlement with Swiss prosecutors and that was that – nobody went to prison and no one was arrested.
The bank has also completed deals with drug dealers including a Spanish business executive named Arturo del Tiempo Marques. In 2009, authorities seized a cargo ship in the Dominican port of Caucedo that was said to be carrying granite to one of del Tiempo’s companies in Spain. Hidden on board was a ton of cocaine, del Tiempo was sentenced to seven and a half years in prison in 2013. But, as of March 2013, HSBC was still doing business with the shell company in del Tiempo’s name, Hynamer SA.
In 2012, HSBC agreed to pay $1.9 billion to the U.S. and admitted it violated money laundering and sanctions laws and “willfully” failed to conduct proper due diligence. It also agreed to a five-year probation with the U.S. to avoid criminal prosecution.
UBS says it stopped setting up offshore companies for its customers in 2010. The Mossack Fonseca files show the bank set up 25 offshore corporations for clients from 2011 to 2013.