Samir’s Selection 04/08/2016 (a.m.)
The lesson of the Panama papers | The Economist >>>
Cleaning up tax havens will not end graft. The prime responsibility for this lies with national governments, many of which should do more to make their finances transparent and their safeguards against cronyism stringent. But it would help if kleptocrats were less able to hide their stashes. Hence co-ordinated global efforts are required to crack down on corporate anonymity and to stop the middlemen who make it so easy for crooks to launder their loot.
Dredging the canal of corruption
Many schemes described in the Panama papers involve anonymous shell companies, whose real owners hide behind hired “nominees”. Such vehicles are known as the “getaway cars” for tax dodgers, launderers and crooked officials. It is time to untint their windows by creating central registers of beneficial ownership that are open to tax officials, law-enforcers—and the public. The penalties for lying when registering a firm should be stiff. Britain and a few smaller countries have led the way in this. Others should follow.
Next, regulate the law firms and other intermediaries that set up and husband offshore companies and trusts. They are supposed to know their clients, weeding out the dodgy ones. But too many are paid to act as buffers, offering an extra layer of protection against those who pry. Governments make great efforts to ensure that global banks comply with anti-money-laundering rules, while this shadow financial system is barely policed. That must change. Governments could start by making it a criminal offence to enable tax evasion by others. Mr Cameron will host a global anti-corruption summit next month. The Panama papers give him just the platform he needs to persuade other governments, and his own, to turn their tough talk of recent years into action.
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