Not just a ‘Panama problem’: banks and Big Four are tax avoiders’ middlemen

A new report by the European Green Party on tax avoidance confirms the role of the world’s leading economies, including European member states, in playing a big role in tax evasion and money laundering through the use of intermediaries like auditors, accountants, tax lawyers and banks (see full list below)

Taking the spotlight away from Panamanian law firm Mossack Fonseca, whose massive leak in April 2016 shed light on international tax dodging scandal thanks to the International Consortium of Investigative Journalists (ICIJ), the report shows the role of European intermediaries in facilitating tax avoidance and evasion.

Swiss banks UBS and Credit Suisse take the first two places in the Top 20 ranking of international intermediaries, creating together as many offshore entities as the next three in line.

On the 140 identified international intermediaries, 127 have at least one active business unit or subsidiary located in Europe. This shows that Europe is a must-be location for nearly 90% of all international intermediaries.

Unsurprisingly, banks from Switzerland and Luxembourg are at the heart of the business of offshore-company intermediation. But major French banks seem to have been very involved as well, since three of the main French banks (Société Générale, Crédit Agricole and BNP Paribas) rank among the Top 10 European banks.

All big 4 accounting firms (Deloitte, PricewaterhouseCoopers, KPMG and EY) are identified as international intermediaries, with only Deloitte (12) and PwC (18) making it in the Top 20 of international intermediaries.

Finally, many names among these 140 international intermediaries remain unknown to the wider public. They are law firms, corporate service providers, consultants which intervened as middlemen and middle-women between wealthy clients and service providers like Mossack Fonseca.

“These new actors were probably on no one’s radar so far but some follow-up would be needed to find out more about their services,” the Greens said.

German Green MEP Sven Giegold said the detailed analysis of the intermediaries shows that enablers of tax evasion and money laundering are not only banks. “Therefore, we need legislation and effective supervision of law firms, notaries, tax advisers and accounting firms. The EU commission and the member states should come forward with legislation in order to ensure fair competition and to end the business of tax dodging,” Giegold said.

Alternattiva Demokratika Chairperson Prof Arnold Cassola, added: "Although the vast majority of the intermediaries named in the leaks have a base in the EU, with the United Kingdom in the forefront, this report also is also relevant to Malta. It is because of the crucial roles which intermediaries play in tax evasion and tax avoidance that the representatives of Maltese companies like Nexia BT and EMD Advisory are being asked to testify in the European Parliament Panama Papers investigation committee."

The Greens said Europe had some “backyard cleaning up to do” as it is the second region with the highest number of intermediaries registered. “Transparency seems an obvious first step because if creating an offshore company is not in itself reprehensible then there is no problem having public registries where their ultimate beneficial owners are mentioned.”

The Greens aid all European member states should start inquiring on the role of intermediaries mentioned in the report and whether they helped their clients to breach European and national laws against tax evasion and money laundering.

As president of the European Council, Malta will be pushing forward legislation on the fourth anti-money laundering directive. The Greens want a European Financial Intelligence Unit in charge of coordinating all national counterparts and stronger sanctions against intermediaries providing assistance to any individual or entity involved in money laundering, tax evasion or aggressive tax planning.

They also want the EU to start a political dialogue with Hong Kong, Switzerland and the United States over the regulation of intermediaries in their own tax havens.