A Guide to Anti-Money Laundering for Crypto Firms

US Prosecutions and the Panama Papers

Financial Crime Knowledge & Training

US prosecutors announced on February 7 that they had secured their first criminal conviction resulting from the Panama Papers investigation, which began nearly four years ago. Harald Joachim von der Goltz, a German businessman and former US resident who was charged with tax evasion, wire fraud and money laundering in December 2018, has decided to plead guilty to at least one of the charges just one month before his trial is set to begin. The specifics of the guilty plea, however, are unclear.

Von der Goltz was a former client of Mossack Fonseca, the Panamanian law firm at the center of the leaks. With the help of two of the law firm’s employees, Ramses Owens and Dirk Brauer, he allegedly funneled millions of dollars through shell companies, stashing the money in offshore accounts that he intentionally hid from the IRS. Also charged is Richard Gaffey, a Boston accountant who, prosecutors allege, helped open US bank accounts for Von der Goltz and falsely certified they were not subject to US tax withholding.

The case is the first one US prosecutors have publicly pursued since the International Consortium of Investigative Journalists (ICIJ) published 11.5 million leaked files from Mossack Fonseca — then the world’s fourth-largest offshore law firm — in 2016. The documents detail how the firm helped many high-profile individuals create shell companies and open offshore bank accounts to shield their wealth from tax and governmental authorities. It remains the biggest leak in history, with the subsequent scandal garnering massive worldwide attention and even inspiring a star-studded feature film, The Laundromat. Investigations into four other American clients are ongoing.

Several prominent politicians and other wealthy individuals around the world have also been named in the leak, including Iceland’s former prime minister, Sigmundur Davíð Gunnlaugsson; the former president of Ukraine, Petro Poroshenko; two former FIFA executives; and soccer star Lionel Messi. Also linked to the Panama Papers is Russian President Vladimir Putin, who, while not named specifically, is closely connected to several individuals who were involved in a complex web of financial crimes for personal gain.

The global impact of the release of the Panama Papers is still being felt. Law enforcement officers in numerous countries have opened hundreds of investigations into those named, many of which are still ongoing. As of April 2019, over $1.2 billion in fines and back taxes have been collected from individuals and companies worldwide, though that number only includes those settlements that have been publicly disclosed and is likely understated.

It has also trained a spotlight on the extent to which shell companies and offshore banking can facilitate tax evasion and other financial crime. While the fact that individuals and companies can exploit these tools for illicit purposes is not news to most, the release of the Panama Papers has brought increased scrutiny to the practice and has undoubtedly played a role in renewed calls for more transparency.

In the US, for example, two bills — the ILLICIT CASH Act and the Corporate Transparency Act — are currently before Congress that would end the practice of anonymous shell companies. Still, whether those calls result in clear and effective policy initiatives remains to be seen.

Originally published February 14, 2020, updated November 17, 2021

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

Copyright © 2022 IVXS UK Limited (trading as ComplyAdvantage).