Following a leak in April of the so-called “Panama Papers,” documents evidencing assets being hidden by shell companies owned by some of the world’s most powerful and influential leaders and executives, President Obama spoke last night regarding new initiatives to combat the “problem of global tax avoidance.” While countries and banks around the world have been yielding to increasing pressure to become more financially transparent and to share information amongst each other, the United States has quickly risen as one the go-to countries for offshore accounts due to the current lax regulation in certain states.
The initiatives laid out by the White House so far would include:
- Executive action to combat tax evasion, money laundering and terrorist financing with stricter transparency rules;
- New treasury rules to close loopholes which currently allow foreigner citizens to hide financial activities behind anonymous entities in the United States; and
- Stricter due diligence rules for banks when handling money on behalf of clients, including keeping records on the true owners behind companies that use their services.
President Obama and the Treasury have also called on Congress to work on a long term plan to tackle offshore tax avoidance by passing a series of detailed measures.