ICIJ posted an interview of Sarah Paul, currently of Everhsheds Sutherland, here, who was formerly AUSA in SDNY and significantly involved in investigations and prosecutions related to offshore accounts, prosecutions particularly of enablers such as banks. Will Fitzgibbon, From front pages to prison time: Behind the scenes of a Panama Papers criminal case (ICIJ 4/3/21), here. The interview focuses particularly on the Panama Papers and Mossack Fonseca law firm.
Some key excerpts:
What do you think has changed since you first investigated the Panama Papers case?
I see the new Anti-Money Laundering Act is a game changer in terms of how these investigations are covered. As part of that, the Corporate Transparency Act is going to require certain companies to provide beneficial ownership information to FinCEN [the U.S. Treasury’s Financial Crimes Enforcement Network]. That part is obviously important.
I think from an investigation standpoint, the new mechanism about how to obtain foreign bank records is significant. Under the new AML Act, if a foreign bank maintains a U.S. correspondent bank account, a U.S. prosecutor can issue a subpoena requesting any records related to any account at the foreign bank, including records maintained outside the US. That subpoena power is not limited to records related to the U.S. correspondent account, which is the limitation that existed previously. While a foreign bank could move to modify or quash the subpoena, there’s language in the new Act that prohibits the court from doing so on the sole ground of compliance with foreign bank secrecy or confidentiality laws.
Had this been in place when I was investigating the Panama Papers, I think it would have made a significant difference. We were able to get foreign bank records through the treaty process. But getting those records would have been much easier and quicker under the new AML Act.
If you had a magic wand, what would you have changed to make the investigation easier?
I think if we hadn’t had to contend with attorney-client privilege issues and had just read the news in full and followed every lead we found, it would have been much easier. To not have to have a filter team would have made the investigation much more streamlined. But obviously we weren’t in that position and had to be careful.
The fact Mossack Fonseca was a law firm was the issue. I had wanted to make the argument in the case about whether it was really the provision of legal advice because this was advice on how to set up structures to hold money. There is an argument that that is not really legal advice at all — you’re acting as a service provider.
One of the things that we always wanted to tee up was this argument about when the privilege has been broken under a “widespread dissemination theory”’ The theory is that because of all the widespread reporting about the Panama Papers and because of the failure of any client to come forward and still claim privilege over the documents, the privilege had been waived. I would expect those types of arguments to be made in the future by prosecutors.
How important is the role of enablers?
They play a critical role. Most of the U.S. taxpayers, though certainly not all of them, who I encountered when I was a prosecutor didn’t have a very high level of sophistication about how to hide their money. They rely on the middlemen or the enablers to give them the tools to do it.