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Registration of anonymous corporations in Panama has dropped by more than half over the past decade, according to a new investigation. Bloomberg Linea,

These corporations, known as Sociedades Anonymas, pay minimal to no taxes and have served as the backbone of Panama’s offshore industry for decades.

A Bloomberg analysis based on data extracted from the Panamanian Public Registry shows a 63% decrease in registrations from 2012 to 2022, ICIJ member mary trini zee informed of. Similarly, the number of dissolutions of companies and private-interest funds per year has also increased; In 2013, there were seven. In 2022, this number had increased to 5,575.

Bloomberg’s analysis also included data from Delaware and the British Virgin Islands — two other privacy jurisdictions long considered competitors to Panama. While the British Virgin Islands also saw a decrease in company registrations over the past decade, registrations in Delaware have grown steadily over the past decade, with 62,510 new ones in 2021. America is currently on top financial privacy indexThe Tax Justice Network’s ranking of jurisdictions most complicated in helping people hide their finances.

Juan Carlos Araúz, president of the Panama Bar Association, attributes this change in the country to the country’s poor reputation after the ICIJ. panama papers investigation, That investigation, based on 11.5 million records leaked from the now-closed Panamanian law firm Mossack Fonseca, uncovered a system of offshore banking that enabled tax avoidance, money laundering and corruption.

“Despite Panama’s efforts to set a standard of control at a higher level than any other jurisdiction in the world, it is still overshadowed by the country’s reputation,” Arauz told Bloomberg.

The same year the ICIJ published the Panama Papers, 2016, Panama saw its highest number of undisclosed corporation dissolutions in the past decade: 14,172. Recently, the Panamanian government has crack down on industrySuspended – and then dissolved – hundreds of thousands of companies, mostly for non-payment of fees.

Mayra Rodríguez, a Panama-based lawyer, also credited the ICIJ’s investigation, but argued that it could result in a fallout from increased enforcement regulations. These rules impose higher obligations on law firms, which Rodriguez says increases risk and potentially reduces demand.

Similarly, pressure from international organizations such as the Financial Action Task Force may have contributed to the change. Panama is currently on FATF’s “greylist” – a list of jurisdictions that the organization closely monitors and that have agreed to resolve certain financial loopholes within a specific time frame.

The FATF has tasked Panama to ensure “adequate verification of updated beneficial ownership information by Obligated Entities and timely access by competent authorities”. And the window of time to do so is closing soon. FATF has issued a warning to panama to complete the country’s action plan by June 2023, or face further condemnation by the organization and its members.

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