European Parliament inquiry into the Panama Papers
European Parliament leaders are set to meet on Thursday to approve the creation of an influential 65-member inquiry committee into the Panama Papers, which is expected to "target the tax avoidance industry nurtured by Britain and other European member states".

According to draft documents, as reported in the Guardian the Committee will:

  • Have a mandate to investigate "alleged contraventions and maladministration in the application of Union law in relation to money laundering, tax avoidance and evasion"
  • Hold public hearings that will be broadcast over the internet
  • Call ministers, tax officials and bank bosses, alongside lawyers and accountants specialising in offshore arrangements  (there is pressure already for George Osborne to be called)
  • Assess whether member states failed to enforce the 2005 anti-money laundering directive and failed to punish institutions found to have breached money laundering rules
  • Look at allegations that states failed to follow the 2011 directive, which compels European countries to alert each other and share information when they suspect tax evasion
  • Assess "the alleged failure to take the appropriate measures to prevent the operation of vehicles that allow to hide their ultimate beneficial owners from financial institutions and other intermediaries, lawyers, trust and company service providers or any other vehicles and intermediaries that allow the facilitation of money laundering, as well as tax evasion and tax avoidance in other member states  (including looking at the role of trusts, single-member private limited liability companies and virtual currencies)"

The final wording of the mandate will be decided at a meeting between Martin Schulz, President of the European Parliament, and leaders of the various political groupings before a vote by MEPs on 23 June. The inquiry is expected to begin in September and continue for a year.

The Guardian reports that this committee is "the most powerful tool available to the European parliament". It can investigate breaches of EU law by member states and check if the commission acted in accordance with its duties under EU treaties. Although it cannot impose penalties, it can make a non-binding request for a full inquiry by the European Commission.

Mossack Fonseca shuts offices in the CDOTs
Mossack Fonseca, the law firm at the heart of the Panama Papers, has announced the closure of their offices in Jersey, Gibraltar and the Isle of Man.

According to the law firm, the move comes as part of a strategy to "consolidate our service office network" and the closure comes "with great regret". Despite the office closures, clients will still be served.

Further to this, Mossack Fonseca remains under investigation in the British Virgin Islands. The BVI Financial Services Commission said on Tuesday it had asked the law firm to appoint a "qualified person" to oversee its operations and submit reports on its conduct.

FTSE groups lead on tax transparency
Analysis by PwC, as reported by Vanessa Houlder in the Financial Times, showed that nearly two-thirds of FTSE 100 companies now disclose information about their approach to taxation, up from under half two years ago.

Companies are volunteering information in response to public pressure, as well as preparing for new laws mandating more transparency. The UK is introducing rules forcing companies to disclose their tax strategy, while Brussels has proposed making them publish where they earn profits and pay taxes in Europe. Regulators are also making demands for more transparency.

Cayman considered third biggest owner of US treasuries
Following recent reports revealing Saudi Arabia's ownership of US government debt, Cayman's ownership has been announced as rising by 31 per cent this year, as reported by Cayman Reporter. Cayman ranks behind China and Japan, who each own more than $1 trillion of Treasuries.

The surge in ownership of US debt for Cayman shows that many Cayman domiciled hedge funds are joining more traditional mutual fund managers in buying Treasuries amid lacklustre returns in other assets, with many global stock indexes posting losses in 2016.

OECD confirms governments must take action to protect economy
Releasing its semi-annual economic outlook, the organisation amplified its call for governments to stimulate their economies by expanding investment and implementing policies that fuel competition, increase labour mobility and strengthen financial stability.

Reporting via the Wall Street Journal confirms the OECD said global economic forecasts have fallen by around 0.3 percentage points in six months. Major central banks' prolonged quantitative easing programs and low interest or negative interest rates have even created distortions that threaten the global economy. The OECD also cautioned that low returns from savers could push them to compensate by saving more money instead of consuming.

"The need is urgent," OECD Chief Economist Catherine Mann said. "The longer the global economy remains in the low-growth trap, the more difficult it will be to break the negative feedback loops," she added.