As outlined in an earlier post, one of the U.S. government’s responses to the Panama Papers revelations was to push forward regulations that required financial institutions to identify corporate owners having more than 25 percent ownership in an organization opening a bank account. There is, however, perhaps a more robust response emanating from the United Kingdom.
As reported by the Financial Times, “the revelations have already prompted UK politicians to demand that banks that sell to offshore companies in murky territories should be held responsible if they enable wealthy individuals to evade taxes.” (Presumably there would be an exception for UK Prime Minister David Cameron.)
This response reminds one of the implications for both financial institutions and non-banking entities in the realm of anti-corruption compliance under such laws as the FCPA or UK Bribery Act. Under the FCPA, it is the bribe payor who is sanctioned; under the UK Bribery Act both the payment and receipt of the bribe is illegal.
What if ancillary entities involved in the transaction, however, were deemed liable or made liable under the types of laws suggested in the United Kingdom as a result of the Panama Papers scandal? Or even more directly in the FCPA world, as a result of the Unaoil allegations, what about any entity, law firm, or even individual who provided due diligence on Unaoil? The implications could well push liability to a new level of risk.
Moreover, with the release of the database of companies and individuals that had used the Panamanian law firm Mossack Fonseca to create shell companies now public, how much additional due diligence should be done on any company listed as even a client? What does that mean in terms of your risk going forward? What if you already deal with a shell company now, should you accept that risk to do business?
In the world of FCPA, the Man from FCPA would urge caution and much analysis to determine all the risks present, running from reputational to potential criminal sanctions before moving forward.
Continue the conversation at Compliance Week Europe: 7-8 November at the Crowne Plaza Brussels. Join us as we look at changes in global anti-corruption regulations, slave labour risks in your supply chain, and how to detect fraud, to name just a few topics. Learn more