NEW DELHI: Europol believes that more than $8.46 trillion is stored in offshore accounts around the world, with $1.69 trillion held in the European Union alone.
Europol, Europe’s major law enforcement agency, has launched an investigation in reaction to the Pandora Papers exposé, with claims ranging from corruption to money laundering and tax evasion.
Europol’s research, titled Shadow Money: The International Networks of Illicit Finance, has emphasised the troubling findings in the Pandora Papers that hundreds of politicians, along with criminal organisations, terrorists, and tax evaders, have benefited from the anonymity of offshore tax-havens.
According to Europol, the total amount of wealth kept in offshore accounts worldwide is around 7.5 trillion euro ($8.46 trillion), with the European Union accounting for 1.5 trillion euro (approximately $1.69 trillion). This money accounts for more than 10% of global GDP.
Furthermore, the EU’s income loss in 2016 was predicted to be 46 billion euros ($51.9 billion) as a result of worldwide tax evasion.
Aside from tax issues, “offshore firms play an important role in money laundering schemes involving organised crime and are frequently utilised to conceal the original origin of the cash.” “Money laundering maintains a vast and sophisticated criminal economy across the EU,” according to the research.
Europol stated that the size and complexity of money-laundering activities affecting the EU had previously been understated.
The report mentions that professional money launderers have built a parallel underground financial infrastructure to execute transactions and payments that is completely independent of any legal financial oversight procedures. This parallel structure ensures that illegal proceeds cannot be tracked.
According to the research, criminals actively manage or infiltrate legal corporate structures for their illicit activities, giving them a veneer of legitimacy and allowing them to avoid punishment.
More than 80% of criminal networks are expected to be involved in the EU’s legal business structures, with half of all criminal networks setting up their own legal business structures or infiltrating enterprises at a high level.
Abuse of legitimate businesses can be long-term, momentary, or sporadic.
Using layers of legal company formations to mask the identity of the benefactors ” is further obscured by one of the individuals residing in an offshore location.”
Beneficial ownership is used for a variety of reasons, including dodging taxes, concealing assets from others, and avoiding international sanctions placed on them.
For example, a nominated director is typically a sham who appears on paperwork while the true owner oversees activities. Nominee directors act as the firm’s face, signing formal documents, creating bank accounts, and potentially performing a range of activities that restrict the beneficial owner’s liability to the company.
On the other hand, there are attorneys in such networks who make identifying the beneficial owner as difficult and complicated as possible.
Some anonymous couriers act as a link between the beneficial owner and the nominated director, allowing them to transmit orders and papers.
Despite the EU and its member states’ efforts to limit the spread of financial crimes, they continue to have access to vast sums of money – Europol estimates that more than 98 percent of illegal assets are not recovered.
Europol proposed a “two-pronged approach — one based on policy and regulation, as well as a robust integrated operational response led by international collaboration” to combat financial crimes.
What Is Pandora Papers
The International Consortium of Investigative Journalists (ICIJ) got the Pandora Papers and distributed them through media partners such as The Washington Post, the BBC, and The Guardian.
The “Pandora Papers” are the latest in a long line of large leaks handled by the ICIJ, beginning with LuxLeaks in 2014 and ending with the Panama Papers in 2016.
They were followed in 2017 by the Paradise Papers, and in 2020 by the FinCen files.
The files contain about 6.4 million documents, nearly three million photos, over a million emails, and nearly half a million spreadsheets that reveal hidden wealth, tax evasion, and money laundering by notable individuals and politically exposed individuals (PEPs).
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