Tax avoidance and money laundering in the 21st century is a super-fast and truly global industry.
Modern telecommunications mean that a Chinese businessman can give orders from Beijing for money to be transferred from his secret Hong Kong bank account to a British Virgin Islands shell company and invested onwards to the equity markets of Europe in seconds – and he can expect the transaction to completed within days.
The huge trove of leaked client data from the Panamanian law firm Mossack Fonseca, known as the Panama Papers, enables us to take a close look at these filigree multinational lattices of connections – and to see where the big centres of this global industry are.
The map above, created by Esri UK, confirms that within Europe, Luxembourg, Monaco, Guernsey and Jersey are big players. But easily the biggest is Switzerland, with 38,433 Mossack Fonseca companies connected to the Alpine nation.
The banking secrecy offered by these jurisdictions and their proximity make them a natural home for the super-rich based in the UK, Germany, France and Italy who want to open an account and keep it hidden from their national tax authorities.
In Asia Hong Kong offers a similar role, with its banks taking deposits from rich Chinese and other tycoons in South East Asia. An astonishing 37,919 companies from the Panama Papers and 12,761 shareholders are associated with the former British colony.
What’s even more telling is that there are 22,930 shareholders from China identified in the papers – probably representing the way the nervous new super-rich in that country have been pulling out their money to hide it abroad.
The biggest centre of activity in the Middle East is Abu Dhabi. The capital of the United Arab Emirates draws in money from rich Arabs in Saudi and elsewhere. Although wealthy oil sheikhs from the region are also, reportedly, just as likely to stash their money in Europe.
Over in the Caribbean, Panama, not surprisingly given its reputation as the global leader in the creation of shell companies and its notorious refusal to co-operate to other tax authorities, stands out as a centre for activity. So does the UK commonwealth nation of The Bahamas.
The British Virgin Islands – a UK overseas territory - looks pretty small on this map, but upon closer examination it shows the BVI was the home of an extraordinary 12,322 shareholders, a much larger number than in Panama or the Bahamas. That is because Mossack Fonseca would typically establish shell companies and register them in the BVI.
All this money does not stay in the Caribbean however. It would typically be invested in the financial markets of Europe and America – but with the ultimate owners of the shares and bonds from all around the world, of course, untraceable.
