Mossack Fonseca – Why there’s a place for Panama-style financial privacy
Panama should be applauded for its “pro-active approach to enhance its effectiveness and credibility” as an offshore financial centre, but it should not lose or devalue the financial privacy it offers, affirms the boss of one of the world’s largest independent financial advisory organizations.
The comments from Nigel Green, founder and chief executive of deVere Group, comes as the Central American country announces it is creating an ‘international panel of experts’ to help enhance transparency in its offshore financial industry.
It follows the leak of millions of documents from Panamanian law firm Mossack Fonseca, which, it is claimed, show that it helped some wealthy clients evade tax.
Mr Green explains: “Over the last several years, most major offshore financial centres have now embraced a new era of heightened transparency,regulation and cooperation. This must be welcomed.
“Yet the Panama Papers case highlights that more work is still needed in some areas. With this in mind, I wholeheartedly champion Panama’s pro-active approach to enhance its effectiveness and credibility as an international financial hub. However, it should not lose or devalue the legitimate financial privacy it offers.”
He continues: “There are many bona fide advantages of the offshore system for the global economy and individuals.
“These include allowing those who qualify to do so to use legal international investment products to form part of a robust and sensible financial planning strategy. Another major benefit of such centres include that they allow companies to avoid getting taxed twice on the same income.
“But for many, one of the key ‘plusses’ is the legitimate financial privacy that’s offered for those who live in countries where there is economic, political and/or social unrest.
“For instance, there is a real and present danger of kidnap in some parts of Latin America for high net worth individuals and their loved ones who keep their wealth ‘onshore’. As such, there is a place and a need for financial privacy to protect themselves.”
Mr Green goes on to say: “But let’s be clear: there is an important distinction between financial privacy and financial secrecy.
“Exchanging information between bona fide government authorities for relevant tax matters is, typically, entirely legitimate. Sharing financial information with anyone else, such as your competitors, or indeed anyone else for that matter, is not.
“Privacy can be necessary. Overarching secrecy is not.”
The deVere CEO concludes: “I am confident that this new Panama panel will help enhance the offshore industry for the better if it does not lose sight of its highly treasured positive values.
“This is especially important as the industry is set to grow exponentially in the coming years as individuals and companies become ever more globalised and as turmoil heightens in many areas of the world.”