But your mom keeps checking up on how much you’re putting in and taking out. You don't

like that, so what you need is a second piggy bank that you keep somewhere else. Your friend

Johnny’s mom is busy and she doesn’t have time checking on piggy banks. You bring your

spare bank over there and money can come and go without anyone being the wiser. But maybe

Johnny’s mom isn’t really “too busy.” Maybe she’s just lazy. Maybe she’s deliberately

telling the neighborhood that for a small fee, she’ll safeguard their piggy banks

and not pay attention to what happens. That what countries like Panama and the Cayman

Islands and other tax havens do. They have very weak regulations in terms of watching

when money is coming into or out of bank accounts. And they have rules that make it easy to form

a corporation without disclosing who owns it. So basically everyone gets to write a

fake name on their piggy bank. There's a Panamanian law firm called Mossack Fonseca. They've got

over 40 offices in dozens of countries around the world. They specialize in setting up these

kind of special piggy banks. They’re called “shell companies” — hollow vessels that

don’t conduct any business, they just own financial assets on behalf of their real owners.

There's been this massive leak of over 2 terabytes worth of Mossack Fonseca documents to the

International Consortium of Investigative Journalists. And it sheds an unprecedented

light on the world of shell companies. People can use shell companies for legitimate reasons

— sometimes you just need privacy. But they’re also useful for covering up scandalous or

embarrassing information. The Panama Papers show that close associates of Vladimir Putin

have taken over $2 billion in assets owned by offshore shell companies. And that the

prime minister of Iceland actually held financial interests in bankrupt Icelandic banks even

as he was simultaneously involved in political negotiations over what should be done with

the banks. And the main use of offshore shell companies is avoiding taxes — because the

government can’t tax money it can’t find. One of the memos says “95 percent of our

work coincidentally consists in selling vehicles to avoid taxes." These tax havens are generally

small countries that could be persuaded to clean up their act, but so far political leaders

in the big countries haven’t wanted to do it.