Actress Emma Watson defended her use of offshore accounts after her name was included in the so-called Panama Papers leak Tuesday, saying her inclusion in the cache of offshore financial and legal documents does not link her to tax evasion or fraud.
Ms. Watson is not the first celebrity to be implicated in the Panama Papers, which were released last month. The 11.5 million document collection contained the names of dozens of government officials and other public figures leaked from the Panamanian law firm Mossack Fonseca & Co., exposing its clients’ links to offshore tax havens.
However, not all offshore accounts and holdings are illegal. Wealthy individuals may opt to move assets oversees for a variety of reasons, such as avoiding the turmoil in their home country markets. And as long as the account holders follow disclosure and banking laws in their nations of residence, the practice is entirely legal.
At this point it is unclear whether Watson's holdings will be investigated further by the British government, but she says she chose to invest oversees for privacy reasons, according to a statement given to The Spectator by her representatives.
Emma (like many high-profile individuals) set up an offshore company for the sole purpose of protecting her anonymity and safety. UK companies are required to publicly publish details of their shareholders and therefore do not give her the necessary anonymity required to protect her personal safety, which has been jeopardised in the past owing to such information being publicly available.
Offshore companies do not publish these shareholder details. Emma receives absolutely no tax or monetary advantages from this offshore company whatsoever – only privacy.
The release of the papers raised questions regarding the legality of such offshore entities and their owners' usage of them, forcing many – including Watson – to explain their connection to the type of accounts that can be used to evade national tax laws and financial regulation.
While offshore assets in and of themselves are not illegal, they have been used to avoid paying taxes and to establish shell companies to shield individuals from liability in ways that are illegal and notoriously difficult to catch.
In the wake of the leak, the US Treasury Department has moved to strengthen its regulations against the anonymous shell groups, now requiring all such entities to disclose their paths of ownership. This month, the US tightened rules regarding shell company ownership disclosure in an effort to reduce personal or corporate tax evasion through offshore outlets.
“Fundamentally our financial system should not provide the rich, the powerful, and the corrupt with the opportunity to shield their assets,” said Wally Adeyemo, deputy national security advisor for international economics, in a call with reporters. “Nobody should be able to hide in the shadows from their legal obligations.”
The new regulations would not affect Watson, a UK citizen, but they could end up forcing Americans with similar financial arrangements, or those behind shell companies, to eventually reveal their connections to their offshore accounts.