Part VI · Cases & Precedents · No. 06

Panama and Pandora papers

Two leaks of offshore-services-provider records coordinated by the International Consortium of Investigative Journalists (ICIJ). The Panama Papers (April 2016) exposed the client base of the Panamanian law firm Mossack Fonseca; the Pandora Papers (October 2021) drew on fourteen providers and documented the use of U.S. trusts, notably in South Dakota, by foreign clients. Both fed into tax investigations and the wider push for beneficial-ownership transparency.

Facts

Panama Papers (April 2016). About 11.5 million documents from Mossack Fonseca, obtained by the German newspaper Süddeutsche Zeitung and shared through the ICIJ. According to the ICIJ the records concern more than 214,000 offshore entities connected to people in more than 200 countries and territories. Mossack Fonseca closed in 2018.

Pandora Papers (October 2021). About 11.9 million records from fourteen offshore-services firms, published from 3 October 2021 with more than 600 journalists. The ICIJ reported links to more than 330 politicians and public officials in 91 countries and territories, including 35 current and former national leaders. It also identified 206 U.S.-based trusts, 81 of them in South Dakota, and reported that customer assets held in South Dakota trusts had more than quadrupled over the preceding decade to about $360 billion.

Issue

The leaks themselves were journalism, not legal proceedings. Their consequences ran through national tax investigations, criminal cases in several jurisdictions, and legislative and regulatory reform.

Outcome / Enforcement responses

• Tax recoveries. Tax authorities in a number of countries opened inquiries into named taxpayers; the ICIJ has reported cumulative recoveries of more than $1 billion in taxes and penalties worldwide attributable to the Panama Papers.
• United States. In December 2018 federal prosecutors in the Southern District of New York charged four individuals, including a Mossack Fonseca lawyer and a U.S. client, with tax-evasion and related offences arising from the firm’s work.
• Iceland. Prime Minister Sigmundur Davíð Gunnlaugsson stepped down in April 2016 after disclosures about an offshore company he had co-owned with his wife.
• Pakistan. The Supreme Court disqualified Prime Minister Nawaz Sharif in July 2017 in proceedings that followed the Panama Papers disclosures about his family’s offshore holdings.
• Panama. In June 2024 a Panamanian court acquitted all 28 defendants, including the firm’s founders, in the money-laundering trial arising from the leak, finding the server evidence had not been gathered with due process.
• European Union. The Fifth Anti-Money Laundering Directive (Directive (EU) 2018/843) extended beneficial-ownership registers, including public access to company registers; the Court of Justice invalidated the general-public-access provision in November 2022 (Joined Cases C-37/20 and C-601/20, WM and Sovim).

Significance

• The leaks gave political momentum to beneficial-ownership transparency already under way through the FATF standards, the EU AML directives and, in the United States, the Corporate Transparency Act (enacted January 2021).
• They increased the reputational cost of offshore structures without operational substance.
• The Pandora Papers’ focus on U.S. trusts drew attention to South Dakota, Nevada and Delaware trust law — see South Dakota.

Subsequent treatment

The U.S. beneficial-ownership regime has since narrowed sharply: a FinCEN interim final rule of March 2025 and a final rule of August 2026 removed reporting obligations for U.S.-formed companies and U.S. persons, leaving the requirement on certain foreign entities registered to do business in the United States (see beneficial ownership). Automatic exchange of financial-account information continues under the OECD Common Reporting Standard, in which the United States does not participate; the United States relies on FATCA instead.

Reviewed October 2026