From Panama to Paradise: Is Your Organization Prepared?

On Oct. 24, 2017, Appleby, one of the world’s largest offshore law firms, disclosed that its client data had been hacked in a 2016 data breach. Subsequently, on Nov. 5, 2017, the International Consortium of Investigative Journalists (ICIJ) began to release the Paradise Papers, which detail the results of its investigation into 13.4 million records from Appleby, as well as Singapore-based trust company, Asiaciti Trust, and information obtained from the company registries of 19 secrecy jurisdictions including Bermuda, the Cayman Islands, Lebanon, and Malta. According to the ICIJ, this collective set of documents includes information on at least 31,000 U.S. citizens, residents, and companies, and exposes connections to senior political figures in the United States, United Kingdom, Russia, Canada, and elsewhere.

In 2016, the ICIJ released the Panama Papers, which contained documents leaked from another offshore law firm, Mossack Fonseca, and the Bahamas Leaks, which contained 1.3 million documents from the Bahamas corporate registry. The ICIJ used these documents to identify potential corruption and fraud, which led to inquiries and investigations from governments around the world. In response to media reports and government inquiries, financial institutions worldwide worked to identify their clients with connections to the leaks and closely examined their relationships with these clients. The ICIJ also used this information to create the Offshore Leaks Database, which identifies connections between individuals, financial institutions, and registered companies. The ICIJ will augment this searchable database in the near future to include information from the Paradise Papers.

Financial institutions should apply lessons learned from the Panama Papers and other leaks when addressing their risk related to the Paradise Papers. Specifically, financial institutions should assess any connections to the Paradise Papers and evaluate their compliance programs in advance of any potential government inquiry. Indeed, members of the Australian, British, and Singaporean governments have been the first to publicly call for such inquiries. Similar reactions are expected worldwide. 

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