Much ink has been spilled in recent days about the Panama Papers and the perfidy of foreign leaders from Vladimir Putin to the (now-resigned) prime minister of Iceland. But almost nothing has been written about how we have arrived in this surreal place where the United States, which once was the first mover for greater transparency in financial transactions, has now become the biggest obstacle to making that happen.

Because it is not Panama or the British Virgin Islands or Switzerland that is now the best place in the world to hide assets. It is the United States. And it’s not so much that the United States has all of a sudden become a good place to hide assets — it’s been that way all along. What’s changed is that other traditionally secretive jurisdictions like Panama have become more transparent, and what rankles many of the leaders in these once-secretive countries is that they opened up under enormous pressure from, guess who, the United States.

Now the United States itself won’t play ball, thanks to obstructionist tactics by U.S. banks and their lobbyists on Capitol Hill.

The Panama Papers have focused much attention on this offshore world, which the International Consortium of Investigative Journalists and others in the media have portrayed as a den of iniquity. And that was true for decades. Even now, traditional secrecy jurisdictions are not all sweetness and light. But they’re a heck of a lot sweeter and much lighter than before — except for the United States and a handful of tiny countries (Bahrain, Nauru, and Vanuatu). Heck, even Panama, which has recently backtracked on its pledge to be more transparent globally, has signed on to a transparency law that the United States pushed for, the Foreign Account Tax Compliance Act. But that law, passed in 2010, is for the United States’ benefit — it requires foreign banks to disclose American taxpayers holding offshore accounts and structures.

U.S. banks, however, are not doing the same kind of disclosure for their foreign clients, and that's the problem.

No one can force the United States to change its law if the political will is lacking.

America’s refusal to go along with global transparency initiatives was not necessarily by design, nor is it supported by all, or perhaps even a majority, in government. Rather, the United States is a victim of current law: The United States cannot promise to share information it does not currently collect. Collection of that information by the U.S. would require congressional action, specifically a law mandating that banks and other financial institutions pass more detailed information about their account holders to the Treasury Department, which could then share it with other countries.

Good luck with that in this election year. And good luck with it later too. Greater transparency is the right thing to do, but might is right: No one can force the United States to change its law if the political will is lacking. Would any of the current crop of presidential candidates, if elected, support such a change? Almost certainly not the Republicans. Perhaps not Hillary Clinton, whose ties with Wall Street are often described (especially by her chief rival, Bernie Sanders) as suspiciously close.

So how did we get to this very odd place where the United States is the world’s No. 1 tax haven? It’s been an interesting ride.

U.S. taxpayers have been hiding money offshore for a very long time. Congress made a concerted effort to crack down on this problem at the start of this century by enacting so-called Qualified Intermediary or “QI” rules, which required foreign banks to report Americans who have accounts that earn U.S.-source income, for example, dividends from U.S. shares held in the account. Unfortunately, the QI regime had two major loopholes. First, if the account was blocked for U.S. securities so that it earned no U.S.-source income, the U.S. account holder could remain unreported. As a result, many offshore banks had two departments to deal with U.S. taxpayers. One served fully tax-compliant U.S. persons. At the Swiss bank where I used to work, this department was called the W-9 Desk and was named after the IRS form W-9 that U.S. taxpayers use to identify themselves as U.S. persons. The other department — the Non-W-9 Desk — served the U.S. tax evaders.

However, some tax-evading Americans wanted to invest in U.S. securities but remain undetected. They were able to do that because of the second QI loophole. The QI rules required reporting only accounts held directly by U.S. taxpayers. The banks were not required to report an American who owned and controlled a shell company that, in turn, owned the account that invested in U.S. securities. Many banks, including my former employer, took full advantage of this loophole, which resulted in the formation of lots of offshore companies for tax-evading U.S. clients.

Then, in 2008, the bottom fell out. A UBS whistle-blower, Bradley Birkenfield, turned the bank in to the U.S. authorities. UBS was prosecuted and finally settled by paying hundreds of millions of dollars in fines. This was the first real nail in the coffin for Swiss banking secrecy in particular, and offshore secrecy in general.

In light of the UBS scandal, the United States became the flag bearer for greater transparency. In 2010, Congress enacted the Foreign Account Tax Compliance Act. After several delays, FATCA went into effect on July 1, 2014. Under that law, foreign financial institutions are required to report their U.S. customers to the IRS regardless of whether the account earns U.S.-source income. And if those customers try to hide behind shell entities, the financial institutions must look through those entities and report their U.S. owners or controlling persons. The new law closed the QI loopholes.

So far, so good. But there was a pesky problem with FATCA. U.S. banks in almost all jurisdictions are prohibited by strict privacy and client confidentiality laws from freely sharing data, let alone sending it to foreign governments. Oops.

How could the U.S. persuade other countries to change their laws to allow the data sharing that FATCA mandates? It took a carrot-and-stick approach. The stick was a threatened 30 percent withholding tax on U.S.-source income to be levied on financial institutions who would not, or could not, comply with FATCA. The carrot was America’s offer to deliver data back to the other country about that country’s own residents with accounts in the United States if the other country so wished.

This offer was enshrined in so-called “reciprocal” Inter-Governmental Agreements with willing partner jurisdictions. These foreign jurisdictions then promptly changed their laws to allow FATCA data sharing with the United States. Given the difficulty of getting any law passed by this dysfunctional Congress, the best the United States could promise in a reciprocal IGA was, first, to share information that current law already requires U.S. financial institutions to give the IRS about foreign account holders, which is scant indeed, and, second, to “commit to” pursuing equivalent levels of exchange.

We weren’t giving up the same information other foreign jurisdictions were. And that spells “tax haven.”

But because of those current U.S. banking laws protecting client confidentiality, the reciprocal IGAs create an extremely un-level playing field tilted heavily in America’s favor. We weren’t giving up the same information other foreign jurisdictions were. And that spells “tax haven.”

Things got worse when the United States resisted signing up to a global version of FATCA, which requires some sharing of information no matter where you are from, for example a French resident with an account in Hong Kong. Other countries did sign on, but the official U.S. position has been that it does not need to because it has FATCA and, in particular, FATCA’s reciprocal IGAs. Problem is, of course, that those IGAs are not very reciprocal at all. No, the real reason the United States has not signed up to the global version of FATCA (called GATCA) is that it requires delivery of much more detailed information than the IRS currently collects about accounts owned by foreign residents in the U.S. Again, Congress would have to change the law to make that information available for the Treasury to share it.

Now it’s up to Congress, and the president. If Congress wanted to make it happen, the United States would no longer be the preeminent secrecy jurisdiction, or even much of a secrecy jurisdiction at all. Non-U.S. citizens would no longer be able to hide their assets in U.S. banks, behind Delaware LLCs, or in Nevada trusts. Money would flow out of the U.S. at a great rate. Expect stiff resistance from the U.S. banking and fiduciary industries to any such change. The U.S. banking industry in particular has steadfastly resisted even the minimal steps toward transparency that the U.S. has proposed in the past. The offshore world resisted those same changes until pressure form the United States and Western capitals made them buckle.

It is no surprise, then, that the Panama Papers, which go back 40 years, reveal so many dodgy offshore structures. However, it is also no surprise that those very same Papers show a sharp drop off in the use of offshore entities after FATCA and GATCA were adopted.

The real question going forward is whether both Congress and the new president will support a law change that enables the U.S. to sign up to the new global norms. That seems extremely unlikely in the near term, no matter who is elected. But it is certainly an issue that should be debated in the current campaign — the U.S.’ honor, international standing and credibility are at stake. In the meantime, the U.S. is in no position at all to preach to other countries, including Panama, about opaque entities and undeclared money abroad. People in glass houses. ...

As you can imagine, traditional banking secrecy jurisdictions like Switzerland, and traditional shell company jurisdictions like Panama and the British Virgin Islands, are furious about the U.S.’ now commanding position as a secrecy jurisdiction. Under immense U.S. pressure, those jurisdictions have thrown open their doors and hurt their own economies only to see the United States usurp their previous role. Now that the international secrecy tide has gone out, it is the United States—along with just a few tiny nations—that everyone can see has no bathing suit.

Peter Cotorceanu is CEO and Founder of www.gatcaandtrusts.com and of counsel to the Anaford law firm in Zurich, Switzerland.