Possible ‘security risks’ seen for those named in Panama Papers

The posting of a searchable database containing the names of the thousands of individuals whose names were contained in the so-called Panama Papers documents could represent a security risk for those named, according to a London adviser who looks after UK resident, non-domiciled clients.

Mark Davies, managing director of Mark Davies & Associates, noted that in spite of a disclaimer on the website of the International Consortium of Investigative Journalists to the effect that there are “legitimate uses for offshore companies and trusts, and that wrong-doing is [therefore] not [to be assumed]” of those named in the database, “at worst, the indiscriminate availability of the data to the world at large may put property and person at risk”.

“In some countries, if you are transparently super-wealthy, you can make yourself and your family political targets as well as targets for corrupt officials and organised crime,” he noted.

Others, such as UK residents, may find themselves the focus of “expensive enquiries from HM Revenue & Customs, where the taxpayer may have the burden to prove that nothing has been done wrong”, Davies added.

What is surprising, he went on, “is how little data has actually been released, and in a small trawl around the database, it is evident that the data is incomplete, and in places incorrect.”

In addition to personal security concerns, Davies said that there will be a possible “commercial dimension” to having one’s details included on the Panama Papers database. That’s because, in the world of business, there can be a significant competitive advantage in knowing a rival’s financial situation: “for example, if you know how much your rival has borrowed. Many will have wanted to keep their financial affairs secret for this reason.

“A small minority of criminals may have used offshore structures to hide their money from the law, but most of the law-abiding customers using offshore structures are doing so for other reasons.”

Davies’s comments echo those of government spokesmen for various international financial services jurisdictions, who say they are reluctant to set up a beneficial ownership register that is open to anyone and everyone who wishes to see it, out of concern that wealthy people and their families could be targeted if the details of their wealth were to be easily obtained by criminals, such as kidnapping gangs.

Instead, many jurisdictions are saying they are willing to exchange beneficial ownership data only with other governments and tax agencies. One of these is the Isle of Man which, as reported,  is introducing a “central electronic register” designed to report the beneficial ownership of island companies “within one hour” – but only  “to tax and law enforcement authorities”, not to private individuals or company executives, “in line with what the European Union [is] currently implementing under its fourth Anti Money-Laundering Directive”, according to Isle of Man chief minister Allan Bell.

As reported, the ICIJ on Monday made live its website, offshoreleaks.icij.org, which it said contained the names of the companies and individuals who were mentioned in the “Panama Papers” trove of more than eleven million documents that were leaked from a Panamanian law firm, Mossack Fonseca, and subsequently presented to the world last month by the US-based journalism organisation.

Among those who’ve been thrust into the media spotlight by having been named in the documents are UK prime minister David Cameron; Russian president Vladimir Putin; Ukranian president Petro Poroshenko; Argentinian football player Lionel Messi; and Hong Kong film star Jackie Chan. Iceland’s prime minister, Sigmundur Gunnlaugsson, was forced to resign after his name turned up in the papers.

Yesterday, UK media organisations were reporting that the name of 26-year-old Harry Potter actress Emma Watson had turned up in the documents. (A spokesperson for the actress was said to have confirmed she’d set up an offshore company but said she’d done it for privacy purposes rather than tax or monetary reasons.)

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