RegulationApr 27 2016

FCA extends Panama papers probe

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FCA extends Panama papers probe

The regulator has written to a further 44 financial firms to investigate their involvement in tax avoidance brought to light by the Panama papers leak, according to the Financial Conduct Authority’s acting chief executive.

Speaking yesterday (27 April) in front of the Treasury select committee, Tracy McDermott said 20 firms were given a deadline of 15 April, with a “second tranche” of 44 told to respond to requests for information by 22 April.

It was revealed at the start of the month that a massive leak of private papers from Panama-based law firm Mossack Fonseca had implicated a wide variety of people and firms in various forms of offshore tax avoidance and evasion.

The FCA responded by sending out requests to certain implicated companies as to what their exposure exactly was, in its part of a wider investigation being carried out with the HM Revenue & Customs, the National Crime Agency and Serious Fraud Office.

Ms McDermott told MPs at this stage it was “far too early” to give any views as to preliminary findings, noting “there’s nothing necessarily illegal about having offshore arrangements; it’s all about their purpose”.

She stated enquiries were being made “with both our regulatory and our law enforcement hat on” but without full access to the papers, “the challenge at the moment is actually knowing where the tip of the iceberg is”.

“We need to understand a little bit more about the factual position in relation to these issues before we can say it’s an enormous problem from a perspective of the legal framework,” added Ms McDermott.

The 11.5m documents cover nearly 40 years, from 1977 through the end of 2015, with the International Consortium of Investigative Journalists still holding onto the source material, despite requests from both the regulator and government.

Adviser view

Dan Farrow, director of Essex-based SBN Wealth Management, said: “I would hope the FCA is not duplicating any resources and communicating with HMRC in their investigations.”

peter.walker@ft.com