Question

‘Shell companies are often associated with the crime of tax evasion, but the Panama Papers show beyond a shadow of a doubt that although shell companies are not illegal by definition, they are used to carry out a wide array of serious crimes that go beyond evading taxes.’ (John Doe, Whistleblower behind the Panama Papers, 2016)

With reference to the quotation, explain how secrecy jurisdictions may facilitate financial crimes.

Answer 1

Secrecy jurisdiction are known for providing facilities that will be enabling people or entities to escape the prescribed rules and regulations of other jurisdiction by using secrecy as a prime tool and these security jurisdiction will be helping in various kinds of money laundering act because they are providing this businesses with tax havens which are used for Generally evading the Taxes.

These security jurisdiction are often providing for various business entities with tax avoidance and tax heavens which are generally known as places which are providing with lower taxation but tax heavens are not just low Tax regime but they will be offering the secrecy jurisdiction because they will be keeping the nature of these transactions private so these will be offering route for many of the the criminal proceeds getting a legal status through money laundering by entering into tax heavens and supplying the money so they are leading to evasion of tax, which are disguised as income or assets which have been passing through that country and fail to report in your own country so there will always be suspicion to these security jurisdiction as they are offering with various kinds of money laundering opportunity.

Panama papers was one of these example of evasion of taxes through secrecy jurisdictions by hiding the the sources of these income and disguising this income assets in other country so secrecy jurisdictions are providing with various opportunities to evade the taxes and black money.