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European banks under regulators' scanner amid Panama Papers issue

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(Credit: HALLDOR KOLBEINS/AFP/Getty Images) Thousands of Icelanders rally in Reykjavik on April 9, 2016 to demand immediate elections on a sixth consecutive day of anti-government protests over the 'Panama Papers' revelations which have already toppled the prime minister. ICELAND-TAX-MEDIA-PANAMA
April 10
8:18 PM 2016

European banking regulators are looking into any links between banks and Panama Papers. FINMA, financial watchdog in Switzerland, has cautioned banks to crack down on money laundering. Geneva prosecutor has commenced a criminal enquiry into banks dealing with tax havens in the wake of Panama Papers.

Panama Papers leak has created tremors across the world as they showed how offshore companies are created in tax havens to stash wealth. Mossack Fonseca, Panamanian law firm specializing in setting up offshore companies, is in the global news as its documents over four decades were leaked out. Mossack Fonseca has offices in Zurich and Geneva. 

Reuters reports that THE extensive use of global banks in keeping funds of their clients in tax havens and leakage of documents from Mossack Fonseca have triggered investigations by several regulators across the world. Many European banking regulators feel that risks are on the rise and this is the high time to check those malpractices in the banking sector.

After the annual news conference, FINMA Chief Executive Mark Branson said "Do I think we are where we should be in fighting misuse in the financial system? No. We think in some ways the risks in Switzerland have risen, not fallen, and that there is more that can be done. We don't want to see large scandals involving Swiss banks."

Panama Papers leak is taking a toll on every country's banking system. There's been major rejigs at top managements of several European banks. Protests are also increasing in Paris after the Panama Papers leak. The Opposition in Iceland has called for a vote against the entire coalition government following the resignation of Prime Minister. A coalition of media outlets including the Toronto Star has published Panama Papers. The list of top personalities include the Leader of Iceland, President of Ukraine, a senior Chinese politician, popular actors, athletes and close friends of Russian President Vladimir Putin, as reported by The Star.

With over $2.5 trillion assets, Switzerland is the world's biggest international wealth management center. It has received more wealth from emerging markets. Branson agrees that it's difficult to trace out the origin of assets. 

RTE News further adds that ACPR, France financial regulator, has asked French banks to submit all the details pertaining to their transactions with tax havens. BaFin, a German regulator, has also begun probe into any such deals with German banks. Netherlands, Austria are also looking into banks transactions with tax havens.

Britain's Financial Conduct Authority has written letters to 20 banks and other financial institutions asking them to furnish, if any, such deals with Panama Papers. Britain authority gave banks and financial institutions deadline until the 15th of April to furnish if any transactions as leaked out by Panama Papers.

Britain's largest bank, HSBC, has over 2,300 shell companies with Mossack Fonseca, according to International Consortium of Investigative Journalists. However, HSBC ruled out suggestions is used to offshore structures to enable its clients save on taxes. 

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