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'Panama Papers' Explained For 5-Year-Olds

Brilliant Redditors strike again.

The "Panama Papers," a story about powerful people hiding money in offshore accounts, is incredibly complicated if you're not well-versed in banking and tax law.

Enter this Redditor, who offers a remarkably simple explanation for the controversy, using a boy and his piggy bank as a metaphor.

"When you get a quarter you put it in the piggy bank. The piggy bank is on a shelf in your closet. Your mom knows this and she checks on it every once in a while, so she knows when you put more money in or spend it.

Now one day, you might decide 'I don't want mom to look at my money.' So you go over to Johnny's house with an extra piggy bank that you're going to keep in his room. You write your name on it and put it in his closet. Johnny's mom is always very busy, so she never has time to check on his piggy bank. So you can keep yours there and it will stay a secret.

Now all the kids in the neighborhood think this is a good idea, and everyone goes to Johnny's house with extra piggy banks. Now Johnny's closet is full of piggy banks from everyone in the neighborhood.

One day, Johnny's mom comes home and sees all the piggy banks. She gets very mad and calls everyone's parents to let them know.

Now not everyone did this for a bad reason. Eric's older brother always steals from his piggy bank, so he just wanted a better hiding spot. Timmy wanted to save up to buy his mom a birthday present without her knowing. Sammy just did it because he thought it was fun. But many kids did do it for a bad reason. Jacob was stealing people's lunch money and didn't want his parents to figure it out. Michael was stealing money from his mom's purse. Fat Bobby's parents put him on a diet, and didn't want them to figure out when he was buying candy.

Now in real life, many very important people were just caught hiding their piggy banks at Johnny's house in Panama. Today their moms all found out. Pretty soon, we'll know more about which of these important people were doing it for bad reasons and which were doing it for good reasons. But almost everyone is in trouble regardless, because it's against the rules to keep secrets no matter what."

Nailed it.

The "Panama Papers" were revealed after an anonymous source leaked 2.6 terabytes of data to German newspaper Suddeutsche Zeitung.

Data in the leak included spreadsheets, emails, passports, and other records showing how powerful people had allegedly hidden money in offshore accounts with the help of Panamanian law firm Mossack Fonseca.

Over 200,000 companies and 14,000 clients were implicated in the leak. Prominent people such as Russian President Vladimir Putin and soccer star Lionel Messi were named in connection with the papers.

Three-hundred and fifty Canadians, including one former Newfoundland cabinet minister, were also among them, according to The Toronto Star.

Royal Bank of Canada (RBC) was also named in the papers after it worked with Mossack Fonseca to set up 370 offshore corporations, CBC News reported.

Offshore accounts can be used for many reasons, such as international business transactions, but they've also been used for money laundering, financing terrorism and tax evasion, the Star added.

But RBC has denied any wrongdoing, saying, "If we have reason to believe a client is seeking to commit a criminal [offence] by evading taxes, we would report the offence and not do business with the client."

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