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November 5, 2020

On The Trail Of Dirty Money

Opening RiskConnect 2019, Bastian Obermayer and Frederik Obermaier, the two Süddeutsche Zeitung journalists behind the Panama Papers leak, explained how they mined the data trove for insights into the murky world of offshore finance. RiskConnect caught up with them one year on.

 

This article will be published in the upcoming RiskConnect 2020 Magazine.

Q: The Panama Papers was a massive data trove and continues to yield newsworthy stories. Could you bring our audience up to speed on significant stories to emerge from the data since you presented at RiskConnect 2019 in Warsaw?

Since we published the Panama Papers more than $2 billion have been recouped and hundreds of investigations launched worldwide. The EU, OECD, Europol and the United Nations regularly cite the Panama Papers when speaking about illicit money flows, sanctions breaches and transnational crime groups. Just recently, German prosecutors have issued arrest warrants for the founders of Mossack Fonseca, the firm at the heart of the Panama Papers.

 

The Papers proved what many experts believed for years. Of course, this has had an impact: just two weeks ago two US citizens were sentenced to three and four years in prison for their involvement in the Panama Papers. They hid tens of million dollars from the IRS – not a particularly good idea. Even now, not a single week passes without a revelation, based at least partly on the Panama Papers. An example is the FinCEN Files, the recent investigation of the International Consortium of Investigative Journalists, where we worked with 100 news organizations worldwide and found important links in the Panama Papers.

Q: Following your work on the Panama Papers and other subsequent investigations (i.e. Lux Leaks, Offshore Leaks, Paradise Papers and Swiss Leaks), what — if anything — still surprises you about how the rich and powerful hide their money?

Hard question. We can say this much: the US citizen who is now in jail for his tax evading measures had set up a very conservative will and passed this to his financial advisors in Panama, who were handling his secret foundation. In the document you could read, that only family members with the highest moral values would be eligible for payments from his, well, illegally stashed money...

Q: In a recent interview with the International Consortium of Investigative Journalists, David Lewis, executive secretary of FATF, was reflecting on the last ten years of FATF mutual evaluation reports. "I would sum up the results as 'everyone is doing badly, but some are doing less badly than others." From your investigations into dirty money, what can you tell our audience about the strengths and weaknesses of Germany in combatting money laundering?

A member of parliament recently called Germany “a gangster’s paradise” and he was right insofar as money launderers are very active here. Germany is nearly paralyzed when it comes to real estate. Gangsters from all around the world are washing their money in Germany, because no one here as any clue who is buying what. There is no central land registry and a lack of transparency. It's like a dream come true for money launderers. After the Panama Papers, the government promised a public register of ultimate beneficial owners (UBOs). Germany has indeed introduced an UBO register, but it is not public at all.

Germany is “a gangster’s paradise” when it comes to real estate.

Q: If you had a magic wand and could make one lasting change to combat financial crime as (a) FATF Executive Secretary, (b) the head of a financial services regulatory and (c) the CEO of a large, multi-national bank, what would it be and why?

When it comes to authorities and lawmakers, we would push for a public UBO register. Without opaque company structures, crooks and criminals would have a far harder job hiding their illicit money. If we were a CEO of a multi-national bank, we would finally stick to our word and the promises of our industry and take AML seriously.

Q: You have the attention of the merchant underwriting community in the RiskConnect magazine. What messages would you like to leave the audience with when it comes to their role in processing payments for those looking to misuse and abuse the financial system?

We think people need to be aware that money laundering is not a victimless crime. Money launderers process the dirty money from human traffickers, terrorists, fraudsters and weapons dealers. Turning a blind eye to money laundering means turning a blind eye to those crimes and, even more importantly, to the victims of such crimes.

Money laundering is not a victimless crime.

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