Global tax crackdown continues with US Panama Papers conviction

3rd March 2020

Here at 6CATS, we’ve been observers of the tax crackdown that has spread around the globe over the last couple of years. As a result of leaks such as the Panama Papers, many countries are facing unprecedented pressure to crackdown on non-compliance, leading to legislation changes and harsh approaches from decision makers.

Most recently, a German businessman charged with tax offenses originating in the Panama Papers will plead guilty in New York, marking the first conviction of its kind in the US. This should illustrate to recruiters placing contractors abroad that authorities are taking every step to tackle fraud. Here’s what you need to know about the US Panama Papers crackdown.

Panama Papers crackdown: first US conviction

The businessman in question, Harald Joachim von der Goltz, a former US taxpayer, was indicted in December 2018 on charges that included wire fraud and making false statements as part of a ‘decades-long scheme to defraud the US.’

Von der Goltz was a long-term client of the now-defunct Panama-founded law firm Mossack Fonseca. Prosecutors allege that von der Goltz hid millions of dollars offshore through shell companies in Panama that he falsely claimed were owned by his centenarian mother in Guatemala.

‘The simple failure of a US taxpayer to disclose the existence of a foreign account is itself a serious violation of US law,’ said Ross Delston, a Washington D.C.-based attorney and anti-money laundering specialist. ‘Once the name of a potential violator surfaces, law enforcement can then fill in the details, thanks in large part to this treasure trove of intelligence called the Panama Papers.’

Von der Goltz is the first known US taxpayer to plead guilty to criminal charges following the 2016 publication of the Panama Papers. The documents revealed how politicians, criminals and business titans hid assets, evaded taxes and facilitated bribes and arms deals through shadowy offshore companies.

Global crackdown

The Panama Papers crackdown has not been limited to the US. Across the world, 23 countries from New Zealand to Argentina have recouped more than $1.2 billion as a result of the papers. Prime ministers in Iceland and Pakistan were forced out of office and more than 6,500 people have been investigated. Overall, there have been investigations in at least 82 countries.

Recently, we covered a story showing that Denmark had made a number of arrests from data in the papers. Back in April 2016, the country became the first in the world to buy data from the leak in order to investigate whether 500-600 Danes were guilty of tax evasion.

This led to authorities so processing 155 cases and demanding a staggering 315 million kroner in taxes. On top of this, Denmark’s tax agency said that it has launched 34 court cases seeking damages from management teams at firms exposed of tax evasion. Tax Minister, Karsten Lauritzen, praised the decision to purchase data, commenting that ‘it has been good business, paying 6 million for considerably more than 300 million.’

Recruiters at risk

Ultimately, the Panama Papers crackdown, be it in the US or anywhere else in the world has caused a situation where agencies placing contractors abroad are operating in a far stricter environment. With the Criminal Finances Act 2017, firms could face criminal charges if contractors are not paying the right amount of tax, wherever they do business.

In this environment, it’s vital that recruitment firms partner with an expert to avoid inadvertently breaking the law. At 6CATS International, we offer contract management solutions in more than seventy countries across Europe, the Middle East and Africa, as well as further afield.

Contact our team today to find out how your firm could benefit from a partnership with 6CATS International.


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