The law firm at the centre of the Panama Papers leak has been fined $440,000 (€410,880) by authorities in the British Virgin Islands (BVI) for eight breaches of anti-money laundering and other regulations.
The BVI Financial Services Commission (FSC) levied the fine, the largest in its history, after finding Mossack Fonseca failed to carry out proper anti-money laundering and terrorist funding checks, and did not undertake adequate risk assessment and due diligence when dealing with customers or keep up-to-date records.
In a statement, the commission said it had made changes to its Risk Assessment Framework as well as taking enforcement action against the firm. It said these adjustments were designed to help it better detect the types of breaches it found during its six-month investigation into Mossack Fonseca, which was fined $31,500 for similar contraventions back in April.
BVI Premier and Minister Of Finance Orlando Smith commented: “Today’s enforcement action clearly demonstrates the effectiveness of the territory’s independent regulator, the seriousness with which it tackles any breaches of its code and, through the adjustments made to its Risk Assessment Framework, an on-going commitment to strengthening its regime to ensure this remains fit for purpose.
“Achieving this outcome in the face of intense international scrutiny is testament to the FSC’s conviction, dedication and willingness to conduct such a thorough investigation whilst holding to account those who fail to comply with the territory’s structure and regulations.”
Responding to news of the fine, Transparency International, a non-governmental organisation that campaigns against corruption, dismissed the punishment as “embarrassingly inadequate”. In a statement on its website, Executive Director of Transparency International UK Robert Barrington said Mossack Fonseca should be handed a fine commensurate to the harm caused by its conduct.
“When you remember that illicit financial flows comprise at least 2% of global GDP and have a devastating impact in developing countries, entrenching poverty and fuelling insecurity, the scale of these fines imposed on Mossack Fonseca is embarrassingly inadequate,” he said.
Mossack Fonseca did not immediately respond to requests for comment on the fine.
Back in April, the 11.5 million-file Panama Papers leak revealed that Mossack Fonseca had helped wealthy individuals, including a number of public figures, use shell companies to avoid paying tax and hide money for illegal purposes. Of the 240,000 shell companies represented by the law firm, more than half were incorporated in the BVI.
Information gleaned from the papers has led to multiple prosecutions for offences including tax evasion, money laundering and fraud all over the world. Only last week, UK investigators arrested three senior employees at major banks as part of a probe into insider trading linked to the leak.