The British Virgin Islands has fined the law firm at the centre of the Panama Papers scandal $440,000 – the largest ever penalty issued by its financial regulator – but campaigners have described the punishment as “too little too late”.

Half of the 240,000 shell companies represented by the Panamanian law firm Mossack Fonseca were incorporated in the BVI, a UK overseas territory.

Following an investigation, the BVI Financial Services Commission (FSC) identified eight breaches by Mossack Fonseca of anti-money laundering and other regulations.

They include failure to maintain controls to prevent money laundering and terrorist financing; failure to assess the risks of customers and one-off transactions; failure to undertake due diligence checks on customers; failure to keep up-to-date records on customers and failure to carry out proper compliance checks.

“The scale of these fines imposed on Mossack Fonseca is embarrassingly inadequate,” said Robert Barrington, executive director of Transparency International UK, which lobbies against tax havens. “Given that it took a leak for its regulator to work out what was happening in its own backyard, the BVI’s own abilities as a regulator are inevitably called into question.”

For now, Mossack Fonseca retains its licence to operate in the BVI, which gives its local subsidiary the right to incorporate and represent shell companies in the jurisdiction.



Announcing the fine, the BVI government said a thorough six-month on-site compliance inspection had been carried out at Mossack Fonseca’s local office, and that a “qualified person” had been appointed to supervise and advise the business.



“Achieving this outcome in the face of intense international scrutiny is testament to the FSC’s conviction, dedication and willingness to conduct such a thorough investigation whilst holding to account those who fail to comply with the territory’s structure and regulations,” said BVI premier and minister of finance Orlando Smith.



“Throughout this time, the FSC has cooperated fully with any requests from other international law enforcement agencies who are conducting their own independent investigations and it will continue to do so as this befits its position as regulator of a leading finance centre.”

The fine is the latest imposed on Mossack Fonseca by the FSC.



On 11 April, Mossack Fonseca was fined $31,500 for similar breaches and for failing to have secure information systems.

In the aftermath of the Panama Papers leak, the BVI government resisted calls from David Cameron’s government to introduce a central register of the real owners of shell companies. Instead, it has passed legislation requiring company formation agents like Mossack Fonseca to hold the information and make it easily accessible online by BVI law enforcement agencies.

