What is Mossack Fonseca
Mossack Fonseca & Co., founded in 1977, was a Panama-based law firm that provided legal solutions, trust services, company formations and foundations and intellectual property services to its clients. Although the firm was domiciled in Panama, it operated globally with an employee base of 600 and a worldwide network across more than 40 countries. The firm was mostly obscure among the general public, until the publication of the Panama Papers on April 3, 2016, which revealed an enormous tax haven clientele that included more than 214,000 entities in 200 countries. (For more information, see "Panama Papers").
The firm said on March 14, 2018 that it was shutting down due to the economic impact and damage to its reputation following the disclosure of its involvement in global tax evasion – exposed in the Panama Papers.
BREAKING DOWN Mossack Fonseca
Mossack Fonseca at one time ranked as the world's fourth-biggest provider of offshore services and was at the center of the stories exposed in the Panama Papers. The company was said to sell shell companies for a fee of as little as $1,000 in cities across the world. According to the International Consortium of Investigative Journalists (ICIJ) report, “Mossack Fonseca worked with more than 14,000 banks, law firms, company incorporators and other middlemen to set up companies, foundations and trusts for customers.”
Mossack Fonseca’s website previously stated that the firm offered research, advice and services for the following jurisdictions: Belize, The Netherlands, Costa Rica, United Kingdom, Malta, Hong Kong, Cyprus, British Virgin Islands, Bahamas, Panama, British Anguilla, Seychelles, Samoa, Nevada, and Wyoming (USA). While the Panama Papers highlighted how the company routinely engaged in activities that abet tax evasion and money laundering, the company claimed to be working within the legal and regulatory framework overseen by different enforcement agencies.
The Panama Papers
The Panama Papers are documents that contain personal financial information about a number of wealthy individuals and public officials that had previously been kept private. An anonymous source, John Doe, leaked the documents in 2016 through German publication Süddeutsche Zeitung. Among the people named in the leak were a dozen current or former world leaders, 128 other public officials and politicians and hundreds of celebrities, business people and other rich individuals.
Offshore business entities are legal in general, and most of the documents showed no inappropriate or illegal behavior. But some of the shell corporations set up by Mossack Fonseca were revealed by reporters to have been used for illegal purposes, including fraud, tax evasion and the avoidance of international sanctions.