IN 2003 I WAS RETAINED BY A MAJOR FIRM IN THE USA TO GATHER INTEL AND RESEARCH THE LAW FIRM OF MOSSACK FONSECA WHICH WAS THE PURPOSE OF MY OPERATING FROM THE REPUBLIC OF PANAMA UNTIL 2014 |
Canadians should be worried and concerned that the good name of Canada is being used by Wealth Management Groups, Offshore Law Firms, Financial Groups to add credibility to companies and individuals potentially seeking to commit tax crimes and to wash the proceeds of global fraud and corruption. This is not a new concept, but one being used for many years and which I used during my wild times of laundering money around the globe.
As a Canadian operating around the world and creating corporations for the sole purpose of moving massive amounts of money in the 1980's up until 1990; the British Virgin Islands (BVI), Singapore, Netherlands were my favourite jurisdiction and using firms; such as, Mossack Fonseca together with Canada is guaranteed to be successful, because I depended on the greed and eagerness of most law firms to create a "shadow front", which served the purpose of my clients.
My firm and I seek to recover assets stolen by international fraud and grand corruption, money laundering and as such, a recent joint cooperation exposé by MSNBC, Global Witness, Reuters, Ken Silverstein & Washington Babylon in which I assisted in the production of the habits and massive money laundering and fraud of real estate; such as, the Trump Tower Hotel in Panama. When the Panama Papers scandal broke in April 2016, the world’s focus turned on the BVI. The actions of the Mossack Fonseca offices here generated much of the criticism heaped on this small Caribbean territory; however. there was much more to the secret world of Money Laundering and White Collar crimes by the banks themselves. Just type in on Google "Canada Banks in the Cayman Islands" and get ready for a huge surprise.
The world’s media descended on the picturesque islands of the BVI and on the Republic of Panama and the ghostly empty tall building structures financed by "cocaine concrete" The golden thread running through most of the attacks against offshore financial centres in the subsequent coverage was an ideological one: that “the 1 percent” made too much money and used offshore company structures to conceal it.
I saw and read every Tom, Dick and Harry becoming "yellow journalists" attempting to gain credibility in exposing the massive nuclear bomb explosion known as the Panama Papers, but in truth, most of the articles were a fabrication. The that was written, the more credit Mossack Fonseca received; however, they were laundering money and proceeds from bribes, drugs, terrorist financing and of course the most deadly of all - "TAX EVADERS".
The offshore industry in the BVI, Cayman, Belize, Belize are not perfect. Neither are the offshore financial centres in Cayman, Scotland, Canada and most notably in the U.S., where Delaware is effectively the most “secretive” of all offshore company platforms (along with Nevada). It is disappointing that America criticizes all the other offshore providers, yet effectively ignores its own.
As for the word “secretive,” why is it synonymous with offshore companies? Canada was considered by Mossack Fonseca’s tax advisers and myself from 1975 to be an excellent place to hide assets. Toronto tax lawyer Jonathan Garbutt aptly described the process of making a company “appear Canadian” (by placing wealth of doubtful origin into a vehicle that is purpose-built to cleanse it) as “White Washing.” He said that this procedure made the company appear to be as pure as the use of "Fleecy" in the laundromat with a sweet scent of nature.
It’s the same as using a Scottish offshore limited partnership, Channer Islands, such as Jersey, Isle of Man, etc.. Ostensibly, Canada and the U.K. strictly regulate financial services. In reality, they all but rubber-stamp the formation of a locally incorporated business entity.
It is repugnant that directors of some Canadian companies could have lied to the Canada Revenue Agency, based on advice apparently given by email from a Mossack Fonseca director. This is organized tax evasion at its most base. The author of these emails and anyone who acted upon this advice should be prosecuted. If it is true that Mossack Fonseca employees “manufactured” email chains and documents to mislead tax authorities, then this is an apparent criminal conspiracy and should be investigated; however, large audit firms will not allow such as investigation in order not to expose their own criminal activities.
Forensic accountant Peter Dent from anti-corruption NGO Transparency International said he often hits brick walls in his Canadian investigations. In order to get hold of the Holy Grail of fraud investigation — genuine Ultimate Beneficial Ownership (UBO) identification documents — you need to produce some evidence of apparent wrongdoing on the part of a target company to convince a magistrate to sign a disclosure order or warrant. But having gained access to a Canadian company’s records, you’ll often be faced with a total lack of UBO identifiers.
Those UBO identifiers need to be made available: not only to frustrate tax evaders, fraudsters and money launderers but potentially terrorists, who might use the anonymity associated with underregulated companies to fund their murderous activities. It is sad for me to recognize that Canada is supporting terrorist financing and allows crime to occur in order to protect the "good ole boys" system.
Anti-money laundering (AML) regulations also need to be extended to incorporators of all Canadian companies, and those companies need to “know their customer.” This would help bring Canada up to the Financial Action Task Force’s (FATF) global standard for combating money laundering. Most of the banks, mortgage companies, real estate firms, law firms do not practise any form of Enhanced Due Diligence Intel and use systems that are over 20 years old. "The less they know, the better they will feel"!
It’s ironic that incorporators of BVI and Cayman companies have been required to adhere to this standard of AML compliance for several years, while big, dumb and happy onshore jurisdictions have been left alone.
Any system of regulation is only as good as the weakest link in its chain. Canada has shown there is still much more to do before it can prevent ‘snow washing.’
Chronicles of Monte Friesner - Financial Crime Analyst
Contributed by Andrei Slavenkov - Netherlands