The Pandora Papers, the third in the “big P” series of offshore data leaks, has exposed dozens of new instances of suspected foul play in the global financial system. In the first week alone, over 150 news outlets simultaneously revealed the owners of thousands of anonymous corporate structures. 

Once again, the presence of celebrities and well-known figures has ensured extensive global media coverage, with the headline finding so far being that over 330 politicians and high-level public officials have links to shell companies. 

In terms of volume, the Pandora Papers are the largest leak of previously undisclosed corporate ownership data to date. This latest revelation is also notable for stemming from multiple offshore corporate providers, allowing journalists to piece together complex corporate structures in great detail.

For compliance teams who struggled to deal with the fallout of the Panama Papers this challenge will be familiar, but on a whole different scale. 

While the novelty of these large scale leaks has worn off to an extent - some observers asked if “peak leak” has been reached - zoom out for a moment and three main trends emerge. 

Source: @ziahaiderrahman

First, the use of complex corporate structures to disguise the ownership of assets continues to be widespread. 

Second, there continue to be corporate service providers who either don’t have reliable due diligence processes in place or are all too willing not to ask questions if the price is right. 

Third, although financial crime and related issues such as corruption slip up and down the public agenda over time, they are now firmly established as politically relevant topics. Announcements of new investigations from public authorities started almost immediately after the most recent stories broke. 

Taken together, these trends mean that the regulatory and reputational risk of doing business with offshore corporate structures will only grow. But the Pandora Papers again show just how difficult and resource-intensive it can be to analyse such complex corporate structures. It took 600 journalists an estimated 1.4 million hours over two years to sift through and make sense of just a fraction of the 2.94 terabytes included in this latest leak.

Source: International Consortium of Investigative Journalists 

This week we can be assured that banks around the world are searching for exposure by manually sifting through old client files -- many in paper form -- as well as transactions, contracts and emails.  As before, these will involve late nights and weekends, until the bank reaches an uncertain conclusion around Pandora Papers exposure, based as much on hope as on certainty.

At Elucidate we can offer a less painful way of tackling these challenges. Our advanced risk modelling and detailed analytics are designed to provide actionable intelligence in just such scenarios. To defend against the risk of offshore companies, in 12 months we have reviewed more than 2.4M data points, including corporate entities, individuals, addresses and intermediaries to analyse their structures, locations and ownership information.  

Example of offshore customer analysis in an EFI report

In times of crisis, when a high-level analysis is insufficient, we can also provide specific details through a machine learning-enabled risk model that can both prevent exposure and, when it does occur, ensure that it is identified immediately.

Example of exposure analysis to leaked entities in an EFI report

For those institutions leveraging our platforms, the rapid analysis enabled by the Elucidate FinCrime Index and the Elucidate FinCrime Risk Monitor result in improved financial crime risk governance -- and fewer late nights and weekends.