When newsrooms around the world announced that they will be publishing a series of investigative reports diving into the shadowy world of tax havens, dubbed the Panama Papers, I thought to myself, "This is big. There will be change."
And big it was -- almost 11.5 million documents cataloguing the financial goings-on of 214,000 companies that have stashed cash in offshore accounts, far away from the prying eyes of pesky government tax men. These companies are owned by world leaders, dignitaries, celebrities, one percenters and more. The scope is truly staggering.
The first world leader to resign has been Iceland's Prime Minister Sigmundur David Gunnlaugsson, who stepped down due to a conflict of interest revealed in the papers. His wife owned an undisclosed offshore company with claims on Iceland's banks.
Many other world leaders, of course, chose to deny, deny, deny. British Prime Minister David Cameron's people asserted that the politician's father's links to an offshore company were a private matter. Pakistan's Prime Minister Nawaz Sharif, whose kids were linked to offshore companies, also denied wrongdoing. The list goes on.
Perhaps most ominously, Russian President Vladmir Putin -- whose links to the tax-evasion scheme were dismissed bY a spokesman -- took the opportunity to create a national guard which, among other things, can be mobilized to maintain law and order at unauthorized protests (presumably like those which forced Iceland's Gunnlaugsson to step down).
Banks get to play by a different set of rules. So do the one-percenters, the celebrities and the world leaders. And they shouldn't get to.
For all the moving and shaking going on around the world, it's inevitable that Canada taps into the $444 million the federal budget has set aside for fighting tax evasion to launch its own investigation and potentially charge the 350 Canucks uncovered by the reports.
I'm still waiting on those protests, but in the wake of these events one brave Canadian institution has already taken a stand to show how our home and native land treats tax-dodgers.
Federal anti-money laundering agency Financial Transactions and Reports Analysis of Canada, a.k.a. Fintrac, slapped an unnamed Canadian bank with a $1.1-million penalty for failing to report a suspicious transaction and various money transfers.
We don't know when this investigation took place, and it's unlikely to be a direct result of the Panama Papers leak. In fact, we don't know much of anything.
The details of the transaction, not to mention the bank's identity, are being withheld per the agency's discretion.
Fintrac hopes the move sends a "strong message" to individuals attempting to short the country's coffers. How's that, exactly?
Perhaps I should cut Fintrac some slack since they're a little new to this. (Literally -- it's the first time the financial intelligence unit has penalized a bank since its inception in 2000.)
I can understand that being linked to such an infraction can result in a major hit to a financial giant's credibility, undermine public trust and potentially even make it shed shareholders. Perhaps a public shaming could give other ne'er-do-wells involved with the institution a chance to hide their tracks.
But doesn't a bank that lets a mistake like this one (and potentially many others) slip by deserve to lose face? And don't Canadian citizens have a right to know?
They're telling evaders is that there's never been a better time to set up an offshore company and funnel funds out of Canada. It's OK to be a tax cheat.
What I see is a lack of public accountability, but moreover, I see a mixed message.
Let's take the fine, for example. A million bucks sure seems like a lot to you and me, but for a multibillion-dollar company, they're getting off easy. In 2015, Canada's four most profitable banks raked in an average $7.1 billion in profits, according to Canadian Business.
A penalty of $1.1 million represents a tiny fraction of a bank's bottom line. Maybe it was only a tiny error, but relative to the median total family income in Canada -- $76,550 in 2013 -- a proportional fine would cost the average citizen just less than $11.50.
That's certainly a far cry from your garden variety speeding ticket. Rack up one of these and maybe you'd have to forgo buying lunch one day.
Could you argue that I'm comparing apples to oranges -- mega-corporations to Average Joes?
Sure. But in doing so, you'd only illustrate the central point of the Panama Papers investigation: banks get to play by a different set of rules. So do the one-percenters, the celebrities and the world leaders.
And they shouldn't get to.
With luck, our government's investigation will weed out Canada's wrongdoers and mete out the appropriate punishments. But I don't have much faith in that happening if this is the kind of reaction we should expect.
Fintrac is sending Canadians and the world a very strong message, but it's probably not the one that they think they are sending.
What they're telling evaders is that there's never been a better time to set up an offshore company and funnel funds out of Canada. It's OK to be a tax cheat.
After all, what's the worst they can do?
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$600 billion of global offshore wealth is housed in Luxembourg, according to BCG.
$700 billion of the world's offshore wealth is stashed in a group of countries, including Monaco and Dubai, according to BCG.
$700 billion of the world's offshore wealth is stored in the U.S., according to BCG.
$900 billion of the world's offshore wealth is housed in the United Kingdom, according to BCG.
$1.1 trillion of the world's offshore wealth is housed in the Caribbean and Panama, according to BCG.
$1.1 trillion of the world's offshore wealth is housed in Ireland and the Channel Islands, an archipelago of islands in the English Channel.
$1.2 trillion of the world's offshore wealth is housed in Hong Kong and Singapore, according to BCG.
$2.2 trillion or about 25 percent of the world's offshore wealth is housed in Switzerland, according to BCG.
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