Greeting from Panama - Cheat on your taxes in paradise.

“Hello. This is John Doe. Interested in data?”

These were the first words from an anonymous source that led to the largest data leak in history. For a year, via encrypted channels, information about the shadowy dealings of Panamanian law firm Mossack Fonseca (MF) was leaked to Bastian Obermeyer, an investigative reporter working for German newspaper Sueddeutche Zeitung.

Obermeyer quickly responded: “We’re very interested.”

The person on the other end insisted that certain security measures be followed prior to the transfer of information.

“My life is in danger. We will only chat over encrypted files. No meeting, ever,” the anonymous source wrote.

When asked why they were willing to undergo such a large scale and risky operation, the unknown person on the other end of the encrypted channel replied bluntly: “I want to make these crimes public.”

After a year of investigation conducted in secret by over 400 journalists around the world, the findings have implicated world leaders, famous athletes, celebrities, politicians, and the mega-wealthy.

So, what kind of service does MF provide and why has it got everybody talking? Mossack Fonseca helped to set up so-called ‘shell companies’ in overseas tax-havens. These companies are used to hide the identity and wealth of an individual. This is not technically illegal, and often it is a prudent business decision to establish an offshore company. If you wished, for example, to engage in a joint venture with a Chinese national, but you didn’t trust the judicial system in China to protect your interests, a shell company could be established in a neutral territory with a reliable judicial system. The issue that is becoming more and more evident through the Panama Papers is the extent to which these offshore companies are being used to help the elite avoid paying their fair share of taxes and in some cases launder money obtained through illegal activities. This is a serious issue — it has long been suspected that the rich and powerful were abusing their status to avoid legal obligations to society — the Panama Papers have provided us with hard evidence of this fact. The average citizen is forced to play by the rules while the wealthy simply make their own.

The range of services MF provides and the extent to which the company will go to protect clients’ wealth is outstanding. When legal papers filed in U.S. District Court in Las Vegas linked funds embezzled by an associate of a former Argentine president to MF, the company initially attempted to block a subpoena demanding information on its client. According to information found in the leaked documents, when this failed, a team of IT staff based in Panama attempted to wipe clean or obscure any information relating to the case. Emails exchanged suggested that they went as far as to send an employee from Panama to Nevada to spirit away physical documentation. “When Andrés came to Nevada he cleaned up everything and brought all documents to Panama,” a Sept. 24, 2014 email stated.

In addition, leaked files showed employees would regularly backdate documentation to help their clients receive financial advantages. This practice was so commonplace that email transcripts show employees discussing a pricing structure — clients would pay $8.75 for every month a document is backdated.

When questioned by the International Consortium of Investigative Journalists, the firm responded that it “does not foster or promote illegal acts. Your allegations that we provide shareholders with structures supposedly designed to hide the identity of the real owners are completely unsupported and false.”

The firm’s co-founder Ramon Fonseca indicated in a recent interview that it is not the responsibility of the company to ensure that its client’s behavior is legal. In a sense he is right–it is not illegal to establish a shell company overseas and it is not illegal to insist on privacy in the management of assets. Fonseca related the creating of shell-companies to the manufacture of cars, arguing that holding Mossack Fonseca responsible for what its clients did with their companies was similar to holding a car factory responsible “if the car was used in a robbery.”

The leaks have already seen some big names exposed for their involvement with offshore companies. Most notably, Vladimir Putin, former KGB agent and current President of Russia is linked to approximately $2 billion in funds squirrelled away in a vast network of overseas companies. That Putin is involved in shady dealings is probably news to no one. Prime Minister David Cameron, on the other hand, urged his country’s overseas territories to help him to prevent tax evasion and create greater transparency in offshore business dealings.

Of course, had he simply asked his own father, he would have a good idea of how difficult that task would be. The late Ian Cameron, father to the Prime Minister, had hired MF to help set up his own offshore company to protect his investment company from U.K. tax law.

Perhaps the biggest fallout yet has been the resignation of Iceland’s Prime Minister. Sigmundur Davio Gunnlaugsson stood down when his holdings in an offshore company were revealed during a televised interview. The company held bank bonds for three of the major Icelandic banks that collapsed in the early stages of the Global Financial Crisis. Gunnlaugsson had advocated against state bail-out measures that would have prevented those banks going bust. The fact he did not declare this clear conflict of interest has now landed him in significant political trouble.

The list of other notable public figures includes the “usual suspects”: mega-wealthy public officials who have long prospered in countries lacking the judicial frameworks to prevent them from accruing massive wealth and power over the people they rule. This includes heads and former heads of state from Iraq, Jordan, Qatar, Saudi Arabia, Sudan, and Ukraine.

But perhaps what is most intriguing is the suspicious absence of wealthy Americans from those named and shamed in the leak. Many pundits have proffered the explanation that Panama simply isn’t the destination of choice for wealthy Americans wanting to disguise their considerable assets. Then again, why would it be? The United States already provides all the means for any wealthy individual wishing to seek refuge from tax.

The U.S. is “effectively the biggest tax haven in the world,” wrote Andrew Penney, a managing director at Rothschild & Co., a branch of the centuries-old European financial institution.

In fact, wealthy individuals from all around the world have been pulling their money out of traditional offshore tax havens such as the Bahamas and the British Virgin Islands and putting it into U.S. tax havens located in Wyoming, Nevada, and South Dakota.

The hypocrisy of the U.S. being a number one destination for those looking to hide their wealth is palpable. On one hand the U.S. passed legislation in 2010 — the Foreign Accounts Act, or FATCA — that requires overseas financial firms to disclose the activities of U.S. citizens and report them to the IRS, with failure to do so resulting in heavy fines and penalties. On the other hand, when an international organization proposed an agreement between countries to expose the dealings of offshore account holders — an agreement that was based on FATCA — the United States refused to sign on. Since 2014, 97 nations have signed the agreement, requiring them to disclose activities — the bank accounts, the investments, and trusts–of international customers. Among those who declined: the illustrious and powerful nations of Bahrain, Nauru, and Vanuatu — oh, and the United States of America.

“How ironic — no, how perverse — that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour,” writes Peter A. Cotorceanu, a lawyer at Zurich law firm Anaford AG in a recent legal journal. “That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.”

“Of course, the “Biggest tax haven in the world” is the United States of America.”

The same international organization that attempted to sign the U.S. onto an agreement that would increase transparency in overseas finances, the OECD, once called Panama the “last major holdout” in maintaining secrecy and hiding funds offshore. However, as a result of increased scrutiny from the Panamanian government and, of course, as a result of the recent Panama Papers leaks, it is looking as if Panama is no longer going to be a viable destination for the discerning tax-dodger. With wealthy individuals pulling their money out of tax havens from all around the world, where could they possibly want to put it?

Perhaps in one of the only countries that has so far failed to sign on to a major agreement regarding increased transparency for international account holders? A country that is already seeing a growth in firms willing to set-up companies with the benefits of low taxation. A country that, in some states, requires less proof of identity to set up a company than it does to get a library card.

The new Switzerland. The “biggest tax haven in the world.” The United States of America.

It would be interesting, albeit perhaps overly-conspiratorial of this author, to suggest a connection between the restrictions being placed on overseas tax havens, the Panama Papers, and the powerful legal and financial firms offering to set up minimally taxed companies in the U.S.

Luckily, there is no need for me to do it, as paranoid types are being proved right.

Notably, Bradley Birkenfeld, arguably the most significant financial whistleblower of all time. Following his time as a Swiss banker, Birkenfeld handed over information on numerous U.S. tax evaders, some of whom he had once helped to hide assets while an employee at Switzerland’s massive bank, UBS. His $104 million reward from the IRS arrived just weeks after he had been paroled from prison for — you guesssed it — abetting tax evasion.

“My life is in danger. We will only chat over encrypted files. No meeting, ever.”

In an interview with CNBC, Birkenfeld argued that the source of the Panama Papers leak was not a whistleblower like himself, but rather the result of a coordinated intelligence operation directed from the United States.

“The CIA is behind this, in my opinion,” Birkenfeld told CNBC.

The basis for his accusation was the absence of American citizens named in the hack in contrast with the number of “enemies of the United States.” He was referring to the number of high-profile citizens from countries such as China, Russia, Pakistan, and Argentina who had been named in the Panama Papers leak.

Of course, there remains the question: if the CIA or other U.S. intelligence agencies orchestrated the hack, why would they implicate David Cameron or the Prime Minister of Iceland? Birkenfeld believes those men were simply collateral damage.

During his time as a Swiss banker, he knew that MF was a piece of the offshore banking puzzle that enabled individuals to hide money from tax authorities, but mentioned that they were relatively small in the grand scheme of things.

Conspiracy aside, the revelation that the mega-wealthy elite have been gaming the system is huge.

Well, it should be huge.

There has always been the suspicion that the 1 percent do not play by the same rules as regular people. However here, we have hard evidence; and likely just the tip of the iceberg. How many more hypocritical politicians and shady billionaires are living off of the services that are provided through tax money — the roads, the hospitals, the educational facilities — that are paid for by average people on average incomes? The unfortunate reality is that we have become desensitized to these kinds of abuses of power. It is an incredible shame that we have practically come to expect it. That when faced with the sheer level of unmitigated corruption we simply shrug and move on.

So why should billionaires have all the fun?

Turns out it’s surprisingly easy to hide your money offshore First, a simple Google search will suffice. The establishment of offshore companies is not illegal and not even particularly expensive. While usually the realm of very wealthy individuals, an offshore company will most likely set you back around $2000.

Once you have established which firm you want to do business with (Pro Tip: Mossack Fonseca may not be the best choice), it’s time to put in some details.

You can pick your company name — make it something interesting- like “April Fool” — the offshore company held by Sanford Weill, former CEO of Citigroup.

You are then able to choose from the veritable selection of tax havens around the world. This includes the Cayman Islands, Samoa, Panama, the Seychelles, the British Virgin Islands and Belize. Of course, you could always nominate to set up your company in the United States; however, if you live there, it’s probably not the best idea.

The next thing you will be asked to do is to nominate a company director. In most cases, this is not you. Of course, you’re not trying to hide anything. You simply don’t want to be linked to the dealings of your offshore company in any way. Just in case.

So, you pay an extra fee to nominate a director. At Mossack Fonseca, this would usually be the name of one of the employees at the firm. At times this can lead to awkward scenarios, such as when one of the co-founders of Mossack became the director of a company owned by one of the most notorious Mexican drug traffickers of all time…

Still, this is not illegal. So you should probably do it. Just in case.

As part of this agreement, some firms will even provide you with a signed, undated copy of your director’s resignation letter. This is so you have complete control — you can even backdate the letter, just in case you need them to have already resigned.

“The revelation that the megawealthy elite have been gaming the system is huge.”

You will most likely be asked for a notarized copy of your passport and a utility bill. This is so that the company knows who you are and where you live. But don’t worry, it would take a leak of seismic proportions to have this information revealed — most companies go to great lengths to protect their client’s identity.

In the case that you really don’t want any relationship with the company — simply pay a lawyer or close childhood friend — and use their identity to add an extra layer of secrecy. Just in case.

Like many services, there are additional options for the savvy offshore account holder — for an added price — of course. One such add-on is to buy a ‘shelf-company’. This is a company that was established many years earlier. This way, your brand new company will appear to have existed for longer than it really has. Particularly useful if you are looking to get a bank loan or confuse any authorities who might be trying to track you down.

We presume that you aren’t doing anything nefarious with your newly established company in the Cayman Islands, so you should probably do this — as it is completely legal.

After as little as 48 hours, you will be the proud owner of your very own offshore company.

Congratulations, you can now conduct completely legitimate business dealings that will be virtually untraceable. The only difference between you and billionaires is that when you get caught doing anything remotely suspicious, you will end up in a federal prison. You won’t have the army of litigators or the government connections to protect you or the hidden mansions and yachts to hide away in. No, at the end of the day, you’re still a regular dude with questionable holdings in an offshore company — and you’re fucked.

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