It took a series of whistleblowers and the resulting toughness from US authorities to force Switzerland to lift its vaunted banking secrecy. It took 'Luxleaks' for a spotlight to be turned on the officially sanctioned but clearly scandalous tax-saving practices of multinational companies. And now we have the political fallout from the Panama Papers, which will force corporate and individual transparency with regard to offshore accounts and letterbox companies.

Many are still in denial and much is being done to deny evil intent. Yes, it is true that both letterbox companies (in use pretty much all over the world) and offshore accounts are not illegal. But it is equally true that Panama, the British Virgin Islands and other exotic offshore centres are making it pretty easy to keep the secrets of the people and corporations who are the beneficiaries of assets held in such companies and accounts. That explains why a number of former clients of Swiss banks, once automatic exchange of information between national authorities was threatened, transferred their assets to a Panamanian account held by a letterbox company.

The intent of tax evasion is clear. The diligent work on the Panama Papers by the International Consortium of Investigative Journalists (ICIJ) shows, for instance, that 'friends' of Russian president Vladimir Putin transferred billions from the Swiss-based branch of a Russian bank to a letterbox company in Panama. Records also show blatant criminal money laundering in Panama by Mexican drug lords, terrorist groups and sanctioned entities such as North Korea, Iran and the Assads of Syria.

If not to hide something, why would the Panamanian law firm Mossack Fonseca, where the Panama Papers leak originated, offer its clients use of a dummy foundation called the 'International Red Cross' (sic)? The muckrackers from the ICIJ checked with the Red Cross in Geneva, which had neither heard of nor benefited from any money from any Panamanian 'foundation'.

The effort to clean up this Augean stable will be arduous, first and foremost because it will not, at least initially, be helmed by the unparalleled legal, institutional and financial might of the US. Letterbox companies were always perfectly legal in the state of Delaware. Wyoming and Nevada now allow the same, and other US states intend to follow. It will take a mighty push from the US federal government in Congress to reverse this trend. A by-now no longer impossible Democratic landslide in November would help, Vice-President Joe Biden (ex-Senator from Delaware) notwithstanding.

Second, the intermediaries to letterbox companies and off-shore accounts are not only banks, now pretty tightly controlled by national regulators and through international treaties and bodies. More crucial are the lawyers, who set up the legal documents and deal directly with those involved. The maze of national laws and rules regulating the legal profession is considerable, and reliance on non-mandatory self-supervising bodies frequent. Moreover, the deeper a lawyer is involved in a client's potentially unsavoury financial business, the easier it is to plead attorney-client privilege in court.

Nevertheless, there can be no doubt that the international machinery to counter tax evasion, fraud and worse through letterbox companies and offshore accounts will soon crank up and produce national legislation. The process started when G20 finance ministers and central bank governors met on the margins of the Bretton Woods Spring Reunion in Washington on 15 April. Egged on by a group of European countries — the so called G5 consisting of Germany, France, the UK, Italy and Spain — they asked all countries to adopt immediately the existing standards of the G20-created Financial Action Task Force (FATF) regarding transparency and economic beneficiaries of financial transactions.

The EU wants to go further and quicker, including by establishing company registers with relevant data, and automatic information exchange by all countries. The emerging markets, but also the US, are not there yet. However, it is a pretty fair bet that we will get much more light in the not too distant future on global offshore funds (which Boston Consulting Group estimates at being worth US$10 trillion), their real beneficiaries and their legal status.

Photo courtesy of Flickr user The Weekly Bull