The Panama Papers: what's really behind them

Few terms have shaped Panama’s international image as much as the Panama Papers.

Yet what they were actually about is often overlooked.

This article sets it out: what the revelations concerned, what they didn’t, and what has changed since.

What it was actually about

The revelations did not concern the state of Panama, nor the Panamanian financial system as a whole.

At the centre stood a single law firm: Mossack Fonseca. Its internal data became public through a massive leak.

Over many years the firm had set up and administered companies in various jurisdictions. Criminal allegations were later raised against individual business practices.

The scandal was therefore that of a law firm, not a verdict on the financial centre of Panama as a whole.

Offshore companies are not automatically illegal

A second point is often lost in public perception.

Offshore companies are used worldwide for entirely legal purposes:

international holding structures
estate planning
asset management

Such a company only becomes illegal when it is misused: for tax evasion, money laundering or other crimes.

The structure itself says nothing about intent. What matters is what it is used for.

What has changed since the Panama Papers

Following the revelations, Panama tightened its rules considerably.

This concerns two areas above all:

combating money laundering
the transparency of international financial transactions

Banks today are subject to strict compliance and identity checks that meet international standards.

Our approach

Anyone considering Panama today as a place to live or base a business should distinguish: between the failings of individual market participants and the financial centre of Panama as a whole.

The Panama Papers were the scandal of a single law firm. They are not proof that Panama as a whole would be a disreputable location.

Our role is to assess this picture soberly: without glossing over it, but also without the blanket suspicion that often clings to the location.