Who would have known how many world filthy rich are hiding billions of dollars rupees in offshore companies across the world if ICIJ had not revealed their bad intentions of exploiting the financial system?
Offshore leaks databases often widely known as international leaks represent the hidden wealth of 1% of globally filth rich person. The best part about Offshore leaks databases is that they reveal how government officials, head of state, and businessmen invested billions of dollars in offshore and shell companies to avoid tax and detection processes.
When the Offshore Leaks Database was first revealed by ICIJ onto the global stage in 2013, it pulled back the curtain on ultra-wealthy, corrupt officials, and criminal networks using offshore accounts to hide their illegally obtained money. The purpose of investing in the offshore leaks isn’t just about tax evasion or secret bank accounts. But, in reality, the Offshore Leaks Database even poses a deeper threat to the global financial system including the involvement of a global money laundering network connected with the offshore companies: From shell companies to secretive trusts, these offshore entities play a key role in enabling the movement of dirty money across the world.
In this blog, we’ll highlight how the Offshore Leaks Database helps financial institutions uncover these global laundering networks, the impact on businesses, and what compliance officers need to do to avoid the risk of getting caught in these hidden financial webs.
What is the Offshore Leaks Database?
The International Consortium of Investigative Journalists (ICIJ) officially revealed the millions of documents of the rich across the world and exposed their wealth in different jurisdictions that they had hidden by established offshore companies in the jurisdictions that have weaker AML compliance. Wikileaks, Panama leaks, Pandora leaks, and many other leaks revealed to the world how these rich people hid their wealth just to avoid tax and hide their illegally obtained money.
The Panama Papers
In 2016, the Panama Paper revealed the 11.5 million leaked documents comprising 2.6 terabytes of data, exposing how the rich across the world hide their wealth using different techniques. The Panama Papers leak exposed how politicians, business leaders, and celebrities hid their wealth in offshore entities. The leaks also revealed how Billions of dollars were laundered through offshore accounts, revealing how criminals use these structures to legitimize illicit funds.
The Paradise Papers
Another major leak with 13.4 million documented, Paradise Papers, shed light on how multinational corporations and wealthy individuals avoided taxes by channeling money through offshore jurisdictions. It also highlighted how criminal networks exploit these legal loopholes to launder money.
Are Offshore leak databases important for organizations?
Collectively, all the offshore leaks database records approximately 8 lac people and companies data who used offshore companies to hide their wealth. As the purpose of these people is to avoid the detection process or tax evasion, this person could be a real threat for money laundering crimes in the future. That is why, the organization must take a close look at the offshore leaks, and must screen their clients particularly the politically exposed persons against the offshore leak databases while onboarding them.
Link Between Offshore Leaks and AML Regulations
The Offshore Leaks Database reveals how politically exposed persons, businessmen, and government officials used offshore entities, shell companies, and trusts to obscure their ownership. Which often leads to money laundering and other financial crimes. That is why after the series of offshore leaks, financial institutions around the world adopted strict AML regulations to ensure no business relations with such entities.
AML Compliance Requirements for Businesses Regarding Offshore Leaks Database
Financial institutions have to remain updated with the latest challenges posed by criminals to avoid being exploited for money laundering crimes. Therefore, if a business wants to be updated with the AML regulation, it needs to adopt some proactive steps, particularly when handling the people listed in the offshore leaks databases.
- Enhanced Due Diligence (EDD)
As we all know people listed in the Offshore leaks databases are not common men, they have influence and are top 1% of the world. Including the politically exposed person, state of heads, etc. Therefore, basic due diligence wouldn’t be enough for such clients. Businesses need to implement comprehensive customer due diligence while onboarding any people listed in the offshore leaks.
Therefore, the EDD must involve a more thorough investigation against such entites, including verifying beneficial ownership and understanding the source of funds.
- Know Your Customer (KYC) Practices:
Knowing whom with business making business relations is very important, particularly when financial institutions screening them against offshore leaks databases. Therefore, KYC protocols are very crucial for businesses to identify the people with a higher risk of indulging in money laundering activities. Companies must verify the identities of customers, especially those linked to complex offshore structures, and continuously monitor their activities. - Transaction Monitoring:
Making multiple transactions to the offshore companies’ whole ownership structure is not transparent and could be a sign of moving illegal money to a destination that has weaker AML compliance. These types of transactions could be a red flag for money laundering. Therefore, financial institutions must monitor every transaction in real-time that flags suspicious activities particularly like offshore accounts in the other jurisdiction. - Reporting Obligations:
To ensure the business is fully complying with the updated AML regulation, a business must immediately report suspicious activities through the comprehensive Suspicious Activity reports. Any links to offshore entities with questionable ties should trigger these reports to help authorities combat money laundering. Facing any hurdle in the way to screen your customer and business partner against offshore database leaks. AML Watcher offers you the comprehensive offshore leaks databases with zero false positive results. Incorporate AML watchers advance the solution and stay ahead of criminals.
