The Panama Papers & Eligible Introducers: Another Hole in Antimoney Laundering Laws

 

More evidence of the ease with which corrupt officials can dodge the antimoney laundering laws, and thus hide money offshore, emerged from a recent Panama Papers story out of New Zealand.  It discloses how lax the standards are for becoming an “eligible introducer.” An eligible introducer is a law firm or other entity that under the antimony laundering laws can arrange for an offshore corporation to be established in a client’s name and for a bank account to be opened in the corporation’s name.  An offshore corporation with attached bank account is what all corrupt officials want. It gives them a covert way to accept and hold bribes and money from other illicit activities.

The antimoney laundering laws are supposed to make it virtually impossible for corrupt officials to get their hands on an offshore corporation with a bank account: first by requiring the firms that establish corporations to scrutinize the background of those wanting to create a corporation and second by requiring banks, before opening a corporate account, to know who the company’s owner is and what the owner plans to do with the company and its account.  If those providing incorporation services and the banks each conduct this “due diligence,” a corrupt official is very unlikely to slip through both screens.  That leaves the official with one of two decidedly inferior options: hide the illicit funds under the mattress or entrust them to a close relative or friend.

Enter the eligible introducer. Continue reading