EU threatens to sanction tax havens like Panama

The European Union has threatened to sanction countries like Panama if they continue to refuse to cooperate fully to fight money laundering and tax evasion, after a leak of data showed the tiny country remains a key destination for people who want to hide money, ABC news reported. 

A leak of 11.5 million documents from Panama-based law firm Mossack Fonseca showed it had helped thousands of individuals and companies from around the world to set up shell companies and offshore accounts in low-tax havens. Because such accounts often hide the ultimate owner of the money, they are a favored tool to launder money, pay bribes or evade taxes.

So far, the scandal has brought down the leader of Iceland and raised questions about the dealings of the presidents of Argentina and Ukraine, senior Chinese politicians, famous actors, athletes and the circle of friends of Russian Vladimir Putin, who some allege has profited indirectly from such accounts.

"People are fed up with these outrages," said Pierre Moscovici, who heads financial affairs for the 28-nation EU. He took to task countries like Panama that facilitate such secretive, low-tax accounts.

"The amounts of money, the jurisdictions and the names associated with this affair are frankly shocking," he said. Speaking of countries like Panama, he said the EU has to "be ready to hit them with appropriate sanctions if they refuse to change."

Panama is listed by the EU as a country that is not cooperative on tax issues, and Moscovici urged the country to "rethink its position in this regard."

The Central American country's government said late Wednesday it is creating an international committee of experts to recommend ways to boost transparency in its offshore financial industry.

President Juan Carlos Varela said the committee's findings will be shared with other nations so joint action can be taken to boost transparency in legal and financial centers worldwide.

But Varela defended Panama against what he called a "media attack" by wealthy nations that he says are ignoring their own deficiencies and unfairly stigmatizing Panama.

ٍSource: MENA