Are offshore bank accounts illegal?

As the “Panama Papers” story continues to unfold, the extent of the offshore bank accounts set up by Panamanian law firm Mossack Fonseca is becoming increasingly clear. To date, leaked documents show that the firm has created almost 215,000 shell companies for about 14,000 wealthy and powerful clients wordwide. While it is yet unclear if the companies and clients involved had been engaged in criminal activity, the story is attracting international attention and is bound to shine a light on the practices of offshore banking and business.

Having an offshore account in itself is not a crime. But these offshore companies and accounts make it possible for people to conceal their wealth and shelter money from taxation should they choose to do so. Offshore accounts and businesses are sometimes also used to help people launder money that was acquired illegally.