Almost 3,500 individuals and companies in the Panama Papers are probable matches for suspected criminals including terrorists, cybercriminals and cigarette smugglers, according to a document.
The analysis, which was carried out by Europol, the EU’s law enforcement agency, sheds more light on the breadth of criminal behaviour facilitated by tax havens around the world.
“The main point here is that we can link companies from the Panama Papers leaks not only with economic crimes, like money laundering or VAT carousels, but also with terrorism and Russian organised crime groups,” Simon Riondet, head of financial intelligence at Europol, told a committee of MEPs.
The Panama Papers, leaked files from the offshore services company Mossack Fonseca, revealed that hundreds of the world’s wealthiest and most powerful individuals had used offshore companies to hide their riches.
While the use of offshore structures is legal, critics have long alleged that they can also be used to facilitate improper or unlawful behaviour.
The memo was prepared for a European parliamentary committee investigating how the offshore world can be used to facilitate tax abuse and international crime.
According to the memo, Europol compared a publicly available version of the Panama Papers published by the International Consortium of Investigative Journalists with its own databases of individuals and companies suspected of criminal involvement and identified 3,469 probable matches .
It matched 1,722 names in the Panama Papers with entities that had been reported by EU member states as having been involved in potential money-laundering transactions. The majority of matches originated from the UK, although the memo cautioned that this was probably due to the country’s status as Europe’s pre-eminent financial centre.
Of the rest, among others, a further 516 of the matches were connected to eastern European organised criminal gangs, 388 were connected to VAT fraud operations, and 260 to cigarette smuggling operations. It said 116 of the names were connected to “Hydra” – a Europol codeword for Islamist terrorism, according to the document – while 99 related to “Cola”, or drug crime.
One of the “main schemes” identified by the Europol analysis of the Panama Papers involves the abuse of trusts – legal arrangements whereby the owner of an asset places it under the control of another individual or company – by criminals seeking to obscure their assets.
The document identifies “the use of corporate service providers by criminals to acquire large numbers of shell companies (including finding third parties for positions within the company) located in offshore/tax havens (usually under the form of holding companies or trusts)” as one such scheme.
That analysis stands in stark contrast with a 2013 letter by David Cameron to the then president of the European council, in which he argued for trusts to be excluded from new transparency measures that would affect offshore companies.
“As we clamp down on the misuse of companies, we must take care not to displace illicit activity elsewhere,” the then prime minister wrote, adding later in the letter: “It is clearly important we recognise the important differences between companies and trusts. This means that the solution for addressing the potential misuse of companies – such as a central public registries – may well not be appropriate generally.”
Separately to its analysis of the Panama Papers, the Europol briefing also suggests that Luxembourg, widely known as a major tax haven for multinational corporations, is also failing to tackle money-laundering offences.
“Reporting figures across the EU do not always appear to be commensurate with the activities of the regulated sector in particular jurisdictions: notably Cyprus and Malta and Luxembourg receive very few reports given the significance of these jurisdictions in offshore financial service and the online gambling industry,” the memo reads.
“Furthermore, the vast majority of reports filed with Luxembourg stem from a single electronic bank/payment service provider, in spite of the fact that other sectors, such as private banking and offshore financial services, offer significant scope for money-laundering activities and tax crimes.”
Europol declined to comment.
Separately, Giovanni Kessler, the director general of OLAF, the European anti-fraud office, told the MEPs his agency had opened four investigations into potential cases of fraud against the European Union “on the basis of an analysis of information related to the Panama Papers and of information obtained from other sources”.
