From wealthy citizens trying to pay less tax, to savvy swindlers and drug lords with riches to hide, people have spent decades stealthily shifting money via European principalities, Caribbean archipelagos, and Pacific islands. ICIJ provides the following simple six-step process for 'stashing your cash'; from 'Choosing a haven' to creating a 'secret identity' and from opening the 'right' bank account to how to 'move' the money; this picturesque guide may be indispensable as Europe's final 'deposit haircut' solution draws ever closer - especially now we know there is 'no plan B." The muddle-through is over...
Step 1 - Choose A Haven
For people hiding money, choosing one of the world's 60 or so offshore jurisdictions is tricky. Each has advantages and drawbacks. It' snot unusual for secrecy seekers to continually move funds around, trying to find the best place for their assets...
Step 2: Create A (Secret) Identity
Next, a tax dodger would create a corporation, trust or other entity to disguise the true name behind their offshore money. For extra secrecy, they often pay front-people called 'nominees' to serve - on paper at least - as the entity's director.
Step 3 - Open A Bank Account
The secret company or trust needs a bank account. A person wanting extra anonymity will sometimes open the account in a different offshore locale than where the comany or trust is registered. Not: Banks usually ask about the source of incoming money to curtail money-laundering.
Step 4 - Move The Money
Creating a secret offshore company or bank account isn't in itself illegal. But in this step, people needing to move money into their accounts undetected have found a variety of ways to skirt the law.
Step 5 - Invest The Money
Offshore money can be invested into mutual funds, bonds, stocks, property - you name it. For those who don;t plan to declare the investment income, as required by law, this is where offshore secrecy works to their advantage: Profits compounded out of sight of the taxman.
Step 6 - Spend The Money
Bringing untaxed offshore money back home to spend presents a dilemma for the ethically challenged. One option is to just come clean to tax authorities and avoid possible jail time. Most methods involve deceit and constitute illegal tax evasion.
No one know for sure how much of the planet's private wealth is parked in tax havens. One estimate is that there's $32 trillion stashed offshore; a more conservative calculation puts it a minimum of $8 trillion. Either way, that means tens - if not hundreds - of billions of dollars in last tax revenues for the world's governments.
Now do you understand why these 2.5 million files covering 120,000 offshore entities was 'accidentally' leaked into the public purview... governments realize that they are running out of options fast and as we noted before - the muddling through is almost over.