drug trafﬁcking, human trafﬁcking, smuggling, corruption and tax evasion (ONE, 2014).
Money laundering helps crime to be meaningful in terms of cost and beneﬁts and gives the
control of ﬁnancial and economic policies in the hands of criminals. A trouble-free money
laundering process encouragescriminals to conduct more crime as the offense they perform
will pay them off witha good sum of proﬁt in a less troublesome manner.
Money laundering erodes the ﬁnancial sector in such a way that ﬁnancial institutions
highly rely on ill-gotten funds, and as the funds return back to their source destination,
ﬁnancial institutions cannot withstand such liquidity shortfall, leading to disintegration.
In present-day world, no country or ﬁnancial institution can work in isolation; therefore, a
ﬁnancial institution associated with money laundering activities will and deﬁnitely attract
repercussions. Money laundering grinds down the real sector of a country by allocating
resources to less proﬁtable and productive sectors of the economy. The phenomenon of
money laundering also distorts economic development and undermines legitimate ﬁnancial
sector as it results in policy blunders. There is instability in exchange and interest rates
because of unexpected cross-border transfers of funds. The risk of monetary unsteadiness
due to ﬂawed asset composition has negative consequences on tax collection and public
expenditure. One of most severe microeconomic impacts is on the legitimate private sector
as upfront organizations using illegal funds ﬂop the legitimate private sector because such
legal entities cannot surviveowing to competition.
Recently reported details from the Panama Papers also revealed the magnitude of illicit
ﬂow of funds generated from wrong doings such as corruption, kick bags, tax-evaded
revenues and other organized crimes. According to leaks, around 214,000 offshore entities
are established in 21 jurisdictions spreading over from Nevada to Hong Kong and British
Virgin Islands. Panama Papers exposed world’s fourth largest services provider, a
Panamanian law ﬁrm Mossack Fonseca, which provides different services including those
for incorporate offshore companies. Not all clients of the Panama-based ﬁrm are
associated with illegal activities, but many of them have linkswith illicit money generation.
According to The Guardian, Panama Papers reveal that the ﬁrm helped criminals in
laundering proceeds generated from illegal and criminal activities, including Brink’s-Mat
gold bullions robbery in 1983 and a banned arms dealer identiﬁed as one of cronies of the
Zimbabwean President Robert Mugabe. The ﬁrm even aided Iranian oil ﬁrms, despite
international sanctions.Around 128 politicians, including 12 world leaders, are identiﬁed as
being associated with offshore entities. These politicians belong to developing or third-
world countries, and, in general, already have an image of corrupt regime, for example,
Pakistan, Zimbabwe, China, Russia and other countries from Africa and Central Asia.
Panama Papers highlight the importance of the identiﬁcation of destinations preferred by
money launderers and others associated with the incorporation of offshore entities to avoid
tax payments in their homeland. After the revelation by International Consortium of
Investigative Journalists, the importance of the identiﬁcation of offshore money laundering
destinations and the estimation of the amount being associated with the activities has
increased as these offshoreentities help numerous politicians, businessmen andcriminals in
hiding their wealth from regulators, tax authorities, law enforcement agencies and
intergovernmental organizations. Almost in all cases, it is yet to be decided whether the
source of funds is genuine or funds are generatedthrough corruption, tax evasion and other
Panama Papers revealed the names of many Pakistani nationals who acquired services
of Mossack Fonseca for establishing offshore entities, including politicians and their
relatives, businessmen, media house owners and other governmental and judicial ofﬁcials.
The most highlighted case is of the companies owned by the familymembers of the current
Where does a