Pandora probe picks up: Over 160 requests go out to 33 countries

The investigation into the Pandora Papers, conducted by a global consortium of news organisations including The Indian Express, has set off unprecedented cooperation between Financial Intelligence Units (FIUs) of different countries.

This has been under the aegis of the Egmont Group, an umbrella organisation that brings 167 FIUs together for the “secure exchange of expertise and financial intelligence to combat money laundering and terrorist financing.”

For India, too, this cooperation has paid rich dividends.

Until date, officials told The Indian Express, the FIU here has sent out 161 requests to its counterparts in 33 countries, mostly the tax havens named in the Pandora Papers investigation.

Significantly, responses have already been received by the FIU in over 35 cases.

The Pandora Papers marked the largest leak of offshore financial records as many as 12 million documents from 14 companies in offshore tax havens with details of ownership of 29,000 offshore companies and Trusts.

Obtained by the International Consortium of Investigative Journalists (ICIJ), a one-year investigation of data linked to India by The Indian Express revealed how individuals and businesses, many already under the scanner, are pushing the envelope to evade detection, using loopholes in the law at home and the lax jurisdiction of tax havens.

Many have opted for a rejig of their offshore assets setting up a network of trusts to project a degree of separation from their wealth and to insulate their assets from creditors.

Om October 4 this year, when the first set of investigative reports were published, the Finance Ministry announced the setting up of a Multi Agency Group (MAG).

Representatives of the FIU, along with the Enforcement Directorate (ED) and the Reserve Bank of India (RBI) are members of the MAG, which is headed by the Chairman, Central Board of Direct Taxes (CBDT).

Government officials said that besides the CBDT which has since sent notices to “most” individuals named in the Pandora Papers investigation (using the Double Taxation Avoidance Agreement route), the FIU began dispatching requests for information on offshore entities and ownership by Indians on a daily basis to its counterparts.

Besides requesting for a confirmation of details published in The Indian Express, the FIU in New Delhi asked its counterparts elsewhere for details such as financial transactions; assets and bank accounts linked to the offshore entity; identity of Beneficial Owners (BOs) and Trustees and current status of the offshore entity.

Officials point out that some requests were of cases/individuals already under the scanner of Indian agencies prior to the publication of the Pandora Papers.

The data received so far from tax havens like the British Virgin Islands (BVI) is being described by officials as “rich in details.” These are being passed on by the FIU to the CBDT and the ED on a real time basis, without waiting for meetings of the MAG.

The MAG has held three meetings so far with updates on progress of the Pandora probe being prepared on a fortnightly basis by member agencies.

Besides the Egmont Group, the Financial Action Task Force (FATF) has also taken note of the ICIJ investigation.

During its October 19-21 plenary in Paris, the FATF had issued a statement which noted, “the recently released Pandora Papers have highlighted, once again, that not enough is being done to prevent criminals from hiding illicit wealth and activities behind complex corporate structures and in offshore banks.”