The Pandora Papers exposed the world to a problem anti-money laundering (AML) expert have known about for some time: thousands upon thousands of new shell companies, offshore tax havens, and secret trusts created every day to hide funds of the wealthy and powerful.
The information was exposed by The International Consortium of Investigative Journalists (ICIJ), a Washington, D.C.-based network of reporters and media organizations. The investigation revealed the creation of these entities is the work of a small army of enablers—an offshore system that includes multinational banks, law firms, and accounting firms headquartered in the United States and Europe.
Data gathered by the ICIJ suggests that governments collectively lose $427 billion each year to tax evasion and tax avoidance. Experts are advising compliance officers in financial institutions to concentrate on strengthening the Anti-Money Laundering (AML) program risks highlighted by the recent Pandora Papers scandal, rather than focusing on individual revelations.
Instead of fixating on any salacious details, financial institutions should pay heed to the information, and the revelations “need to be taken in stride,” stated Lauren Kohr, a veteran compliance officer who now serves as senior director of AML for the Americas with the Association of Certified Anti-Money Laundering Specialists (ACAMS).
Kohr stated that financial institutions should pay heed to evaluate the effectiveness of their overall risk-based Anti-Financial Crime program, with particular focus on Enhanced Due Diligence, Customer Due Diligence, and UBO verification. She also advised financial institutions to closely monitor high-risk customers, products, services, geographies, and transactions to prevent the risk of frauds such as money laundering and terrorism financing.
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