Paid Millions to Hide Trillions: Meet Crime Enablers In Traditional Finance


The Pandora Papers investigation of the International Consortium of Investigative Journalists, a non-profit newsroom network of journalists based in Washington, D.C., revealed that there are still many go-to places for those seeking to hide illegal wealth.

However, the people not mentioned in the media coverage about the Pandora Papers are the enablers who work to make the richest people in the globe richer. They help them avoid or evade taxes and pass their wealth on to others. These enablers allow criminals and kleptocrats to launder their illicit gains.

Although they may not be as rich as their clients, they get paid millions to hide trillions.

The wealth defense industry

There has been a long-standing ” wealth defense industry” that has been around for many years. It is made up of a group of professionals, including bankers, lawyers, accountants, and notaries. They use anonymous shell companies, family office, offshore accounts, trusts, and trusts to protect the wealthiest people in the world from tax collectors.

These “enablers”, who are highly paid, assist dictators, oligarchs, and criminals all over the globe.

There has been much mainstream reporting about the actual crimes, financial abuses and financial misdeeds perpetrated by wealthy individuals and foreign governments. What about the financial intermediaries who provide the escape routes for criminals and handle the details?

Kenyans have been reading the Kenyan morning papers that report a statement by President Uhuru Kenyatta in response to reports that he was among more than 330 former and current politicians who were identified as recipients of secret financial accounts under the Pandora Papers. (AP Photo/Brian Inganga)
Some elites pay well-respected professionals and businesses to open doors to political representatives, lobby against sanctions and launder money and reputations. These individuals and institutions push the limits of the law, and they degrade our democracy’s principles.

The Deloitte Anti-Money Laundering Preparedness Survey 2020 estimates that the amount of money laundering in a single year amounts to between 2 and 5 percent of global GDP. This is approximately USD 800bn to USD 2,000 per year.

The FinCEN Files of the ICIJ offer unparalleled insights into the world of international banking, anonymous customers, and financial crime.

They demonstrate how banks blindly transfer cash through their accounts for people that they don’t know, failing to report transactions with all of the hallmarks money laundering until many years later, and even doing business with clients involved in financial frauds.

Signs of promise

Many jurisdictions continue to avoid law enforcement agencies, which chase secret money trails of tax dodgers or criminals.

There are encouraging signs that governments all over the globe are beginning to take action due to the apparent regulatory and enforcement gaps and the lack of political will to fix those gaps both actively and practically.

Globally, there is a greater demand for transparency and accountability. This is combined with calls for greater wealth equality and investor demands for ESG (environmental social, governance and governance) principles.

These factors are important in attracting the attention of top political leaders. However, the reality is that their primary motivation is likely to be the alarming trend towards a decrease in tax revenues. At their June 2021 summit, G7 leaders endorsed the idea of a 15% minimum global tax rate. This is a clear sign that things are changing.

In June 2021, leaders of the G7 countries pose for a photograph in Cornwall, England. (Leon Neal/Pool Photo via AP).
The current model isn’t sustainable. Political pressure, necessity and fiscal realities will all force politicians to take action. They will soon be required to do more than lip service to wealth inequality or power imbalance. This allows the wealth defense industry and its clients to subvert and avoid paying their fair share.

To expose the enablers and reduce loopholes that allow wealthy people and criminals to operate with impunity, transparency and accountability are essential. The Conversation

This article was republished by The Conversation and is licensed under a Creative Commons licence. You can read the original article.

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