Regulator asks firm to appoint ‘qualified person’, and US and Jersey agents start winding up as Panama Papers fallout continues

This article is more than 4 years old

This article is more than 4 years old

Mossack Fonseca, the law firm at the centre of the Panama Papers revelations, remains under investigation in the British Virgin Islands, the country’s financial regulator has confirmed.

The BVI Financial Services Commission said on Tuesday it has asked the law firm to appoint a “qualified person” to oversee its operations and submit reports on its conduct. The announcement came as local agents for Mossack Fonseca in the US and Jersey began winding up their operations.

MF Corporate Services, based in Las Vegas, filed notice that it is to resign as registered agent for all 1,025 entities on its books, the Nevada secretary of state said on Monday. The state revealed it had imposed a $10,000 (£6,800) fine, the maximum penalty allowed, on the US agent for failing to maintain adequate records.

Mossack Fonseca’s Las Vegas outpost came under scrutiny when the Panama Papers revealed leaked emails suggesting employees from the firm’s Panamanian headquarters had attempted to wipe computer logs and hide documents following a subpoena from a federal court. Mossack Fonseca denied destroying any documents.

The leak of 11.5m documents from Mossack Fonseca, obtained by Germany’s Süddeutsche Zeitung newspaper and shared with newspapers including the Guardian by the International Consortium of Investigative Journalists in Washington, has led to the resignation of the Icelandic prime minister and political scandals in Argentina, the UK, Malta and Pakistan.

Nevada compliance investigators examined the records kept by MF Corporate Services on 7 and 8 April. Under state law, registration agents must keep details of the name and address of a contact person for each company they represent.

Facebook Twitter Pinterest Tortola in the British Virgin Islands. Photograph: Christian Wheatley/Getty Images

Investigators found documentation was consistently missing. A follow-up visit on 26 and 27 April found the firm was still failing to maintain its files in compliance with Nevada law. A penalty notice was issued on 2 May.

“The office of secretary of state is committed to ensuring that businesses and registered agents properly maintain records in accordance with Nevada law,” the state secretary, Barbara Cegavske, said. “I plan to organise a working committee to further review laws relating to business registration, registered agent requirements and the maintenance of related records.”

This week, clients of Mossack Fonseca’s Jersey office were told it plans to shutter its operations in August or September. An employee at Mossack Fonseca & Co (Jersey) Limited confirmed a notice had been sent to clients on Monday.

The outpost is not licensed to incorporate offshore companies in Jersey. It provides liaison between local customers and the Panama law firm, helping clients set up and manage screen companies in the BVI and other tax havens.

The BVI financial regulator began enforcement action against Mossack Fonseca on 29 April, and last week received an initial report. The authorities have declined to publish the report or comment on its findings.

“The investigation into Mossack Fonseca, following the release of the so-called Panama Papers, is currently being conducted by the BVI’s independent regulator, the Financial Services Commission,” a spokesperson for the BVI government said.

“The first stage, requiring the submission of a qualified report into the firm and its activities, has been completed and as a result the Financial Services Commission has directed Mossack Fonseca to appoint a qualified person to oversee its operations and to provide regular reports to the FSC.

“The investigation remains ongoing and the FSC continually assesses licensees to determine whether they continue to meet the requirements of a financial services licence.”

Despite the investigation, Mossack Fonseca has not been suspended from incorporating new offshore companies in the BVI, or acting for its existing clients there.

In a statement, the firm said: “A qualified person has been appointed to observe, advise and report to the BVI FSC on several aspects relevant to the business.”