Panama Papers-Incited Tax Probe Looms For EU Banks, Attys … – Law360 (subscription)

By William Shaw

Law360, London (January 30, 2017, 8:30 PM GMT) —
A major European Parliament committee will next month investigate the role played by lawyers, accountants and bankers in the tax evasion networks revealed in last year’s Panama Papers leaks, the European Union legislative body said Monday.

The Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion will take testimony from investigative journalists and lawyers on Feb. 9, as it determines how much the clandestine networks depended on Europe’s financial professionals. The hearing will focus on Germany and Scandinavia.

“Lawyers and other experts will share their views on what could be improved and what, in their views, needs to be done to avoid the setting up of offshore schemes for tax evasion of money laundering purposes in the future,” the 65-member committee said in a statement.

More than 11 million documents had been leaked from the offshore law firm Mossack Fonseca & Co., prompting the Panama Papers’ explosive revelations in April. The leaks from the firm — whose location in Panama lent its name to the scandal — revealed a sprawling global network of banks, law firms and accountants helping the rich to establish anonymous shell companies, some of which were used to avoid paying taxes. The U.K. was heavily implicated in the documents.

Following its September launch, the committee was given 12 months to investigate the Panama Papers and report on whether member states and the commission failed to enforce anti-money laundering and tax avoidance laws.

Those giving testimony next month include Frank Johnigk, head of the department for money laundering and criminal law at the Bundesrechtsanwaltskammer, or the German Federal Chamber of Attorneys; Benedikt Strunz of the Washington-based International Consortium of Investigative Journalists, which originally broke the story; and Thorsten Höche, head of the legal department at the Association of German Banks. 

Also scheduled to testify are Aleksandra Helena Sobisz and Katrin Keikert, former compliance officers at Germany’s Berenberg Bank.

The committee has said it wants better protection for whistleblowers coming forward on tax havens, and on Dec. 1 lawmakers voted overwhelmingly to make commissioners reveal a complete picture of their financial activities, through sweeping changes to the commissioner’s code of conduct.

In November, Pierre Moscovici, European commissioner for the Taxation and Customs Union, unveiled plans to force financial advisers to disclose aggressive or abusive tax schemes, reflecting Brussels’ growing anger at the role of legal and financial professionals.

The European Commission in September had asked member states to help name non-EU jurisdictions that “refuse to play fair” on tax. That launched a process that could end in late 2017 with the EU’s first “blacklist” of offshore tax havens.

The released papers do not necessarily reveal illegal activity or other wrongdoing by the law firms or their clients, but attempt to shine a light on the secretive and complex use of offshore shell companies to conduct business — some of which is controversial or linked to questionable persons and activities.

–Editing by Ed Harris and Edrienne Su.