Canadian lawyer Martin Kenney, who specializes in chasing down money internationally, says the Panama-based firm at the centre of a large leak of documents about offshore companies has a responsibility “to know their client.”
Kenney, who is the brother of Conservative MP Jason Kenney, told CTV’s Power Play that law firm Mossack Fonseca’s past suggestions that they don’t bear responsibility for what companies do after they are formed is “just silly.”
“Of course they have responsibility,” he said.
Kenney said that offshore financial services agencies are required to collect data about the identities of the customers they assist so that global fraud investigators and law enforcement officers can seek court orders to get that information when needed.
The law firm’s co-founder said in Spanish-language on Panamanian television last month that the firm has no responsibility for what clients do with the offshore companies that the firm sells, and that blaming Mossack Fonseca for what people do with their companies would be like blaming a carmaker “if the car was used in a robbery,” according to the International Consortium of Investigative Journalists.
Mossack Fonseca released a statement Monday stating, in part, that it “routinely (denies) services to individuals who are compromised or who fail to provide information we need in order to comply with “know your client” obligations or when we identify other red flags through our due diligence.” (See the full statement below.)
Kenney described the firm as “old-fashioned and aggressive.”
He added that there is “an older legacy culture in the industry from the 70s and 80s where there was no regulation -- where you could go as a foreign company off shore, no questions asked, no one knew who owned it and that was the end of the story.”
Kenney said things started to change under U.S. President Ronald Reagan during his so-called war against drugs, and that there was an “explosion” of global financial regulations after Sept. 11, 2001, in an effort stop the funding of terrorism.
Kenney said that Mossack Fonseca -- which he pointed out operates in about 40 locations -- is merely one of many firms helping set up confidential companies around the world, and that the 200,000 companies in the leak make up about 10 per cent of the world’s “offshore companies.”
Kenney has long advocated for more aggressive laws and regulations, although he pointed out Monday in the Globe and Mail Monday that “only a small proportion of offshore entities are vehicles used for money laundering, fraudulent asset concealment or tax evasion.”
He also stated in the op-ed, “in begrudging defence of Mossack Fonseca,” that “high-volume, low-fee models that company formation agents operate cannot include enhanced due-diligence checks on every user of offshore services,” due to “basic economics.” He added that higher fees charged to incorporate companies could cover the costs of “enhanced due diligence across the board.”
Kenney told Power Play that there is a grey area between tax “avoidance” which is perfectly legal and tax “evasion” which is not, but that he believes most humans “are at risk of making bad choices ethically -- without rules of supervision, transparency and openness.”
