NEW YORK, April 7 ― An anonymous person from a Panamanian law firm, Mossack Fonseca, has leaked millions of documents describing how some of the world’s richest hide money in offshore havens.

UC Berkeley economics professor Gabriel Zucman estimates that there is least US$7.6 trillion kept in offshore tax havens. However, due to the nature of tax havens, it’s difficult to know for sure what the true amount is.

“Although the spotlight is currently on Panama, tax havens like Panama exist all over the world. People use them to avoid regulations that protect transparency, and taxes in their home countries,” says Zucman.

“Wealth isn’t necessarily kept within tax haven countries. Often such places only serve as addresses for shell companies, which exist solely on paper, and are created for as little as US$1,000.

“On paper, these shell companies act as the intermediaries that own the wealth, whether that asset is a painting or a Swiss bank account.

“Because of the complex organisational structure of these shell companies, it’s very difficult to figure out who a company actually belongs to.

“Setting up a shell company is not illegal and its existence is not always for a nefarious reason. A shell company may be established as a way to for one to save up funds to open a business. It may also act as a front for a project that a well-known company wants to keep from the public’s eye until it’s ready.

“However, these shells are often used as tax or legal loopholes, as setting up a shell company doesn’t require much identification, which allows their ultimate owners to evade scrutiny.” ― Reuters