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In Wake of Panama Papers Scandal Obama Calls for Stricter Bank Regulations, Tax Rules

In a news conference today President Obama addressed rules and proposed regulations announced Thursday intended to help the U.S. fight tax evasion and other crimes connected to anonymous offshore companies and accounts.  The announcements come after a month of intense review by the administration following the first release of the so-called Panama Papers, millions of documents stolen or leaked from Panamanian law firm Mossack, Fonseca.  The papers have revealed a who’s who of international politicians, business leaders, sports figures and celebrities involved with financial transactions accomplished through anonymous shell corporations.

The new regulations include a “customer due diligence” rule requiring banks, mutual funds, securities brokers and other financial institutions to determine, verify and keep records about the actual ownership of the companies with whom they do business.  The administration has also proposed regulations requiring owners of foreign-owned “single-member limited liability companies” to obtain employer identification numbers from the IRS.  In an effort to increase transparency and address “the problem of global tax avoidance,” both rules are intended to make more easily discoverable the actual ownership of offshore companies and accounts, allowing for easier investigation of suspected fraud, tax evasion and money laundering.  Currently, companies can do business in the U.S. anonymously by registering in states that do not require full disclosure of actual ownership.

The new rules create regulatory obligations for a broad array of financial institutions, and potential new obligations for off-shore investors.  A further release of Panama Papers is expected on Monday, with the identities of many U.S. companies and individuals involved in such “anonymous” shell corporations likely to be revealed, and greater scrutiny of such transactions and the financial institutions involved with them likely to follow.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume VI, Number 127


About this Author

Raymond C. Marshall, Sheppard Mullin, securities enforcement attorney, white collar defense lawyer, corporate investigations legal counsel

Raymond Marshall is a business litigation and white collar investigations partner in the firm’s San Francisco office. He is also the Co-Team Leader of the White Collar Defense and Corporate Investigations Team and Co-Team Leader of the Securities Enforcement Team.

Mr. Marshall represents clients in both complex business litigation and white collar defense. He has conducted a wide array of internal investigations and company inquiries, including cases alleging insider trading, stock options backdating, securities fraud, accounting irregularities...

David S. Cannon, Sheppard Mullin, Government Contracts Attorney, High Stakes Litigation Lawyer, San Francisco,

David Cannon is a partner in the Government Contracts, Investigations & International Trade Practice Group in the firm's San Francisco office.

Mr. Cannon handles high-stakes litigation, including banking, commercial litigation and intellectual property disputes.  In banking-related matters, he has handled securities fraud claims, as well as mortgage and lender disputes stemming from the financial crisis.  This work has included large scale class actions in federal and California state courts.  With commercial disputes, he has helped technology companies, manufacturers, investors, insurers and project sponsors successfully defeat tort, unfair competition, false advertising, product defect, construction defect, insurance coverage and environmental contamination claims. 

His intellectual property experience has included trade secret and trademark matters as well as licensing issues and contract disputes. He has a keen understanding of the business challenges  technology companies face when their core intellectual property is at stake.  His IP litigation cases have included numerous multi-million dollar claims.