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Feds 'Chomping at the Bit' to Use Panama Papers to Catch Criminals

An official says the 11 million documents will keep "a lot of agents very busy for a very long time" tracing offshore money and crime.
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Federal agents and prosecutors are “chomping at the bit” to exploit the Panama Papers and launch prosecutions, a senior federal law enforcement official told NBC News -- but want to be sure that the way the huge data dump about offshore money was obtained doesn’t jeopardize their cases.

“It is a bonanza,” the official said in reference to the cache of 11 million financial documents about shell companies that a Panamanian law firm set up for some of the world's shadiest and most powerful people.

“It will keep a lot of agents very busy for a very long time,” the official told NBC News. “They will be following the leads and figuring out who is trying to hide stuff illegally – money and also illegal activities.”

Under the auspices of the International Consortium of Investigative Journalists, more than 300 journalists around the world have used the leaked documents –- a trove more than 1,000 times larger than the original Wikileaks document dump –- to do a series of stories on how the shell companies have been used to hide all sorts of criminal activity and efforts to avoid taxes.

The official, who is familiar with ongoing discussions about the document trove, said agents from every three-letter agency are lining up to crunch the data to bolster existing cases and build new ones against organized crime syndicates, drug cartels, foreign corrupt and kleptocratic regimes and even suspected Hezbollah terror cells in Latin America and possibly the U.S. That includes the FBI, the IRS and other Treasury agents, the Drug Enforcement Administration (DEA) and the Department of Homeland Security (DHS).

Even the CIA and other intel agencies are hoping to use the financial records, several current and former officials told NBC News. And lawyers and prosecutors from the Department of Justice and the Securities and Exchange Commission are gearing up to review them too.

But first the feds need to figure out the best way to use the documents without running afoul of a complicated thicket of laws, especially the attorney-client privilege that law firm Mossack Fonseca has used to protect its thousands of clients from public scrutiny over the past four decades.

Authorities run the risk of having prosecutions thrown out, and investigations quashed, if the underlying information is found to have been improperly obtained. One key question, according to the U.S. official and others, is whether the documents were hacked or otherwise illegally obtained from Mossack Fonseca.

Image: Panamanian law firm Mossack Fonseca
The building where the office of Panamanian law firm Mossack Fonseca is located in Panama City, Panama.Alejandro Bolivar / EPA

“We are in a waiting mode for some guidance regarding to what extent we can exploit this stuff,” said the senior federal law enforcement official. “All of the U.S. agencies are really chomping at the bit to use these.”

Over the past few days, senior lawyers from the Justice and Treasury departments began a series of phone calls, meetings and other communications aimed at establishing formal guidance for the many federal agencies that want to use the documents.

John Cassara, a former Treasury money-laundering expert, agreed that the Panama Papers would be a huge boon to U.S. authorities. He said it has been very difficult, if not impossible, to trace ill-gotten gains from illegal activities that have been parked in offshore accounts. He said it’s been even harder to trace the potentially billions of dollars in “clean” money that individual and corporate entities have stashed offshore to evade taxes.

U.S. officials believe they won’t have trouble getting access to the Panama Papers, especially as there are indications that at least some of the documents will be released publicly in a few weeks.

And they are confident that they will be able to use many of the documents by claiming Mossack Fonseca knew or should have known that particular clients were engaged in illegal activity, citing “know your client” financial transparency laws in the U.S. and internationally.

In the meantime, another key step will be for the Justice Department to prepare a “clean team” that would vet the documents before introducing them into investigations and open cases where they might run the risk of tainting them.

In response to the Panama Papers, Mossack Fonseca issued a lengthy statement denying any wrongdoing, and saying that does all of its required due diligence and that“our company does not foster or promote unlawful acts.”