More than a dozen banks will have to turn over details of their dealings with Panama law firm Mossack Fonseca to New York's banking regulator, as authorities continue to respond to revelations from the Panama Papers investigation.
The order came from the New York Department of Financial Services and was sent to 13 foreign banks identified in articles published by ICIJ and its media partners. Among the banks are Deutsche Bank AG, Credit Suisse Group AG, Commerzbank AG and ABN Amro Group NV, Bloomberg reported.
The banks have been given 10 days to respond, and were asked to provide communications, phone logs and records of transactions between their New York branches and employees or agents of Mossack Fonseca, as well as any subsequent communication with shell companies formed as part of these transactions. According to Bloomberg, the regulator has also asked banks to identify any New York-based personnel who may have held positions at the shell companies.
The regulator is reportedly searching for potential violations of rules or regulations related to the law firm. The banks have not been accused of wrongdoing.
The second ranking Democrat on the U.S. House of Representatives Financial Services committee also used the Panama Papers investigation on Wednesday to request hearings on a bill introduced earlier this year aimed at stopping anonymous company ownership.
Rep. Carolyn B. Maloney, D-N.Y., cited the Panama Papers investigation in asking for the hearings, and said its findings highlighted "the ease with which criminals and corrupt officials can use anonymous shell companies to hide assets from law enforcement."
Maloney’s bill, “The Incorporation Transparency and Law Enforcement Assistance Act,” would require corporations and limited liability companies to disclose who their true owners, to the states in which they are incorporated, if the states have such a requirement, or to the Treasury department.
Offshore entities often take advantage of multiple ways in which to make it harder to identify their ownership, including corporate records that make it appear as if stand-ins are actually running the business, or being owned by foundations in jurisdictions such as Panama where the law requires that those involved in setting up the foundation “or any person that obtains information relating to the activities, transactions or operations of the foundation maintain strict confidentiality even following its termination.” Breaches of the law are punished with up to six months imprisonment and penalties up to $50,000.