Panama is a republic. It is strategically located in Central America. It is bordered to the north by the Caribbean Sea and the Pacific Ocean, to the west by Costa Rica, and the Southeast by Colombia. Prior to 2016, it was known more for its strategic location mainly because of its international maritime shipping corridor, the Panama Canal. On the 3rd day of April 2016 all of that changed and there is hardly a reference to Panama without reference to the infamous “Panama Papers”. It was thrown into the spotlight as a tax haven and as such all discussions centre around its status or loss of status as a tax haven. This is even though the epi-centre of the “papers” is a law firm, Mossack, Fonseca. Everyone, including lawyers, is curiously silent on the consequences for the attorney-client relationship, especially the duty of confidentiality, of the “leaking” of the “papers” from a law firm. It was surreptitious and it came as a shock and surprise. The curious silence must be considered against the background of the release issued by Mossack Fonseca in the days following. They set out their record of compliance with regulatory agencies local and international “including the Banking Superintendence of Panama and the Intendancy of Non-Financial Regulated Services Providers.” This is in addition to observing the requirements of the Foreign Account Tax Compliance Act (FATCA). The statement further reads in part:

Recent media reports have portrayed an inaccurate view of the services that we provide and, despite our efforts to correct the record, misrepresented the nature of our work and its role in global financial markets.
These reports rely on supposition and stereotypes, and play on the public’s lack of familiarity with the work of firms like ours. The unfortunate irony is that the materials on which these reports are based actually show the high standards we operate under, specifically that:

• we conduct due diligence on clients at the outset of a potential engagement and on an ongoing basis;
• we routinely deny services to individuals who are compromised or who fail to provide information we need in order to comply with “know your client” obligations or when we identify other red flags through our due diligence;
• we routinely resign from client engagements when ongoing due diligence and/or updates to sanctions lists reveal that a party to a company for which we provide services has been either convicted or listed by a sanctioning body;
• we routinely comply with requests from authorities investigating companies or individuals for whom we are providing services; and
• we work with established intermediaries, such as investment banks, accountancies and law firms, as part of the regulated global financial system…

In providing those services, we follow both the letter and spirit of the law. Because we do, we have not once in nearly 40 years of operation been charged with criminal wrongdoing. We’re proud of the work we do, notwithstanding recent and willful attempts by some to mischaracterize it…