Wednesday, April 13, 2016

Hong Kong has become a new cradle for shell companies

Hong Kong was Mossack Fonseca's go-to spot for financial intermediaries like P&P Secretarial Management, home to 2,212 accountants, banks and other middlemen Mossack Fonseca used to set up 37,675 offshore companies for its global clients between 1977 and 2015 — more than any other place in the world, according to ICIJ's analysis.
Hong Kong has emerged as a major design center for offshore vehicles, a place brimming with people expert at packaging and protecting wealth. The back pages of newspapers here teem with advertisements for corporate formation companies, one-stop shops promising fast bank account opening, corporate compliance, tax and accountancy services. Offshore vehicles are used to minimize tax, mitigate political risk, and circumvent onerous regulations in China. And they are completely legal.
But Hong Kong's offshore financial machinery works so well, and so discreetly, that it can be abused by those seeking to hide illicit assets or evade taxes. As traditional havens, like Switzerland, cave to years of grinding pressure from European and American tax authorities, unsavory money is drawn to Hong Kong, which despite reforms, retains its reputation for secrecy, non-cooperation, and a light regulatory touch, watchdog groups and lawyers say.

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