Brazil charges members of Panamanian corporate services firm with money laundering
MIAMI, USA — Two senior members of a prominent Panamanian corporate services firm, Mossack Fonseca, have been charged with money laundering in Brazil, based upon allegations that they assisted in laundering the proceeds of bribes and kickbacks, in the country’s Petrobras corruption scandal. The Mossack firm is also charged with the intentional destruction of evidence, in an alleged effort to obstruct justice in the investigation.
The former presidents of Brazil, and the Organization of American States (OAS), allegedly received bribes, resulting in the direction of lucrative business to companies that made the illegal payments. Mossack Fonseca, through a public relations aide, on the company’s website, has denied the allegations. No evidence has been published at this time, though the names of corporations created by Mossack and used to purchase real estate in Brazil have been disclosed to the press.
Panama’s corporate service firms have long been suspected of moving illicit client “flight capital” into the country’s banks, often smuggling bulk cash on their own aircraft. Though Panama law requires that only attorneys and law firms can be resident agents for Panama corporations, there is generally no attorney supervision of clients and little, if any, due diligence performed on customers, other than a perfunctory OFAC check. The issuance of a Poder (Power of Attorney) to a third party to conceal the beneficial owner of the bearer share companies is a normal procedure, further obscuring any effective money laundering investigation.
Panama watchers will be closely observing the parallel Panamanian law enforcement investigation of Mossack, which was opened after the news of the Brazil case broke, as corporate service firms in Panama have traditionally not been targets of law enforcement investigation, or adequate government regulation.
Kenneth Rijock is a banking lawyer turned-career money launderer (10 years), turned-compliance officer specialising in enhanced due diligence, and a financial crime consultant who publishes a Financial Crime Blog. The Laundry Man, his autobiography, was published in the UK on 5 July 2012.