5th October 2021
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- Pandora’s financial box - Millions of leaked files on the super-rich
- American withdrawal – Monzo pauses US expansion
Millions of leaked files on the super-rich
What’s going on?
Nearly 12m files detailing the financial activities of the richest and most powerful people in the world has been leaked over the weekend. The so called “Pandora Papers” have been analysed in an investigation spanning months involving 600 journalists in 117 countries –the biggest of its kind in history.
Why is this important?
So what’s the conclusion after sifting through nearly 3 terabytes of data (equivalent to 750,000 photos stored on a smartphone)?
The super-rich know how to stay super-rich using loopholes like tax havens.
Billionaires, celebrities, politicians and business leaders don’t pay for assets like property in their own name or use regular bank accounts. Instead they put their money in places like the Cayman and British Virgin Islands, Panama and Switzerland and buy property using companies located there.
The Papers reveal complex networks of companies that are set up across borders, often resulting in hidden ownership of money and assets.
Some of the most eye-catching reveals in the paper include:
- The King of Jordan spent more than $100m on properties around the world.
- The Czech Republic Prime Minister used shell companies to buy a chateau in southern France for $22m, that he failed to declare.
- The 11-year old son of Azerbaijan’s President owns a £33m office block in London.
- Former UK Prime Minister Tony Blair allegedly used an offshore firm to buy a £6.5m house in London saving his family over £300,000 in stamp duty.
The findings of the Pandora Papers are in line with what’s been known for a long time – the uber-wealthy use, often legal, loopholes to minimise their tax burden. The question is whether governments will act in unison to close these loopholes and increase how much rich people pay in tax. Given how powerful these very wealthy people are, it seems unlikely.
Monzo pauses US expansion
18 months after applying for a US banking licence, Monzo has decided to pull out of the process.
The British fintech app had been in discussions with American regulators since April 2020 but recently learned that its chances of gaining approval were low.
Monzo had hoped to be able to lend money to US customers and offer fully insured deposit accounts in the country like it does to 5 million users in the UK.
Fellow fintech start up Revolut also applied for a US banking licence back in March but there’s no word yet on how it’s progressing.
It’s not easy setting up a bank in the US, the process is long and complex. Robinhood, the stock-trading app, withdrew its application seven months after it was submitted.
But Monzo still plans to break into the US. The company said it would do so through its existing partnership with Ohio’s Sutton Bank, rather than as a standalone lender.
The news of the banking licence withdrawal comes months after it issued a warning about its ability to survive as a business after reporting a £115m loss in the past year.
Stat of the day
No Time to Die has broken international pandemic box office records, making $119m in the 54 markets where the film has launched to date
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