They are calling it the biggest leak of offshore banking data in history.
A group of journalists obtained more than 11.9 million documents from 14 offshore companies around the world.
After spending two years compiling that information, they released it as the Pandora Papers. These documents purportedly detail how the rich and the powerful hide their wealth from authorities.
The way they managed to hide their assets, the journalists reported, was through the use of trusts. Trust companies provide a variety of investment and tax services for their clients.
However, some trusts are used to hide the property of wealthy clients, including those with ill-gotten wealth.
The investigation revealed information on 206 U.S.-based trusts that held combined assets of more than $1 billion. Nearly 30 held assets of people accused of illegal activities, including fraud and bribery.
South Dakota – New Tax Haven
The leaks also revealed that South Dakota ranks high on the lists of jurisdictions popular among trusts.
Over the past decade, assets managed by trusts in South Dakota more than quadrupled in the past decade. Trusts now manage $360 billion in assets from clients from around the world.
The leaks came from Trident Trust, a trust company located in Sioux Falls, SD. Trusts in the town of Sioux Falls, with a population of less than 200,000, collectively manage tens of millions of dollars in assets.
South Dakota’s banking regulation allows for levels of privacy protection that rivals those of offshore tax havens such as Panama or the Cayman Islands.
Laws in the state protect the money invested in trusts from foreign governments, creditors and tax authorities.
Other states that compete on privacy for investors are Alaska, Delaware, Nevada and New Hampshire.
Banks and trusts companies are legally prohibited from accepting money they know was obtained by illegal activity.
According to journalists that compiled the Pandora Papers, there’s no proof that foreign clients invested money obtained through criminal activity with the U.S.