The queen has money stashed away in secretive accounts in the Cayman Islands. Members of Donald Trump’s cabinet have financial links to Russian oil interests. Your local football club turns out to be owned by a trust based somewhere with lots of palm trees, and your credit card is funded from a small island you have probably never heard of. Even Bono, the closest thing we have to a modern-day saint, has been caught up in the scandal.
The “Paradise Papers”, a huge stash of offshore financial information leaked at the beginning of the week, have certainly prompted some lurid headlines, and created some red faces, not least at Buckingham Palace. And yet, along with a string of other massive leaks of offshore data, they don’t actually reveal anything very much that is genuinely illegal. What they do show is something that should worry us all a lot more: that financial confidentiality is being destroyed.
When every piece of data is routinely stored online, and those computers connected to the internet, any kind of account can be hacked into, or the data transferred to a simple USB stick, and then published online for anyone to take a look at. We should be very careful about allowing that. People have a right to privacy in their financial affairs as much as in any other aspect of their lives. There are perfectly legitimate reasons for individuals or companies to keep bank accounts private.
Such as? They may have family members or spouses to placate. Parents don’t always want their offspring to know exactly how much money they are giving to anyone else, and wives might want to keep some financial details secret from their partners, and vice versa. Companies might choose to have an offshore subsidiary because they don’t want to reveal the details of their finances to their rivals. Or they might want to keep information back from employees or suppliers. Those are all good reasons why bank accounts are kept confidential.
With the Paradise Papers, so far as we can tell at the moment, someone took vast quantities of data – estimated at 13.4 million records – from the law firm Appleby and handed it over to the German newspaper Süddeutsche Zeitung, which then shared it with papers around the world. That sounds like theft of private information. When the “Panama Papers” were leaked to the same organisation last year, the source was an anonymous individual who claimed he or she was fighting global inequality. A disgruntled employee? A lone hacker? A former client? We have, as yet, no way of knowing.
Sure, if people are money laundering or evading taxes they should be exposed, and they should be punished if guilty. But we seem to be creating a culture in which it is viewed as perfectly acceptable to hack into private bank accounts and put everyone’s details on the web. It is not likely to stop at offshore accounts either. Once we get used to the annual round of leaks, it won’t be long before banks, fund managers and financial advisers in this country find details of their clients are leaked and posted online as well.
Confidentiality had a purpose. It allowed people to manage their affairs in private, to handle tricky situations, and to talk candidly to their bankers, brokers and advisers. A few organisations have decided that every financial deal should be exposed. In truth, banks and their clients may have to get used to that. Certainly anyone with an offshore account should, by now, expect details of it to be published either this year, or next. But we will miss that old-fashioned privacy more than we realise – because without it far less will get done.