As the world knows, the Panamanian law firm Mossack Fonseca was the subject of a stunning data breach of approximately 11.5 million financial and legal documents in April 2016. These leaked documents, the so-called “Panama Papers,” have been publicized primarily by the International Consortium of Investigative Journalists and allegedly reveal a global system of undisclosed offshore accounts, money laundering, and other illegal activity. The effect of the Panama Papers has been explosive—the documents allegedly implicate world leaders, financiers, celebrities, and other prominent individuals from across the world in the use of shell companies to conceal assets and possible illegal activity from their home governments. The Office of the U.S. Attorney for the Southern District of New York has indicated that it is launching an investigation into these matters, as have enforcement agencies in many other countries.

To date, reports have suggested that relatively few U.S. citizens have employed the services—legitimate or otherwise—of Mossack Fonseca. However, and even before the Panama Papers came to light, reports also have suggested that individuals from across the globe have perceived that the United States is a secure place to hide assets. The states of Nevada, Wyoming, and Delaware—which allow for the quick creation of limited liability companies without identifying the true beneficial owners—have been criticized in particular.  The Panama Papers have sharpened the national and global focus on the risks associated with money laundering, tax evasion, terrorist financing, and other illicit activity arising from the creation and use of U.S. entities whose true owners are obscured through corporate forms, as well as the need to identify the people behind these entities. The Panama Papers also illustrate how the growing possibility and ease of massive data breaches upends any notion that even the most powerful can count on privacy.

Although stated efforts at regulatory reform have been ongoing for years, the Panama Papers scandal clearly motivated the U.S. government to act in 2016 to address the alleged attempts by non-U.S. individuals to launder their proceeds of illegal activities through U.S. financial transactions. As discussed below, a key focus of the U.S. government’s recent regulatory campaign—and of international enforcement efforts—is on identifying the true beneficial owners involved in financial transactions. This trend of expanding duties increases the potential risks—simply due to the expanding universe of required government scrutiny and filings—for entities and individuals accepting money from, or making representations on behalf of, possible bad actors from abroad or in the United States.

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Peter D. Hardy

hardyp@ballardspahr.com | 215.864.8838 | view full bio

Peter is a national thought leader on money laundering, tax fraud, and other financial crime. He is the author of Criminal Tax, Money Laundering, and Bank Secrecy Act Litigation, a comprehensive legal treatise published by Bloomberg…

hardyp@ballardspahr.com | 215.864.8838 | view full bio

Peter is a national thought leader on money laundering, tax fraud, and other financial crime. He is the author of Criminal Tax, Money Laundering, and Bank Secrecy Act Litigation, a comprehensive legal treatise published by Bloomberg BNA.  Peter co-chairs the Practising Law Institute’s Anti-Money Laundering program, and serves on the Steering Committee for the Cambridge Forum on Sanctions & AML Compliance

He advises corporations and individuals from many industries against allegations of misconduct ranging from money laundering, tax fraud, mortgage fraud and lending law violations, securities fraud, and public corruption.  He also advises on compliance with the Bank Secrecy Act and Anti-Money Laundering requirements.  Peter handles complex litigation involving allegations of fraud or other misconduct.

Peter spent more than a decade as a federal prosecutor before entering private practice, serving as an Assistant U.S. Attorney in Philadelphia working on financial crime cases. He was a trial attorney for the Criminal Section of the Department of Justice’s Tax Division in Washington, D.C.

Priya Roy

royp@ballardspahr.com | 215.864.8336 | view full bio

Priya focuses her practice on white collar defense, internal investigations, and complex civil litigation. She counsels clients in AML and BSA matters, as well as matters involving allegations of tax fraud, violations of the False Claims…

royp@ballardspahr.com | 215.864.8336 | view full bio

Priya focuses her practice on white collar defense, internal investigations, and complex civil litigation. She counsels clients in AML and BSA matters, as well as matters involving allegations of tax fraud, violations of the False Claims Act and Anti-Kickback Statute, violations of the Food, Drug, and Cosmetics Act, securities violations, and other fraud and regulatory offenses and abusive acts and practices.