Panama Papers: What you need to know

The international scandal known as the Panama Papers just broke Tuesday, April 5 and already has everyone listed in the leaked documents freaking out.

Iceland Prime Minister Sigmundur David Gunnlaugsson has already resigned his position due to the scandal and actress and former Miss World Aishwarya Rai Bachchan is among other powerful world leaders denying the claims that they are a part of the growing scandal. Why is this a concern for everyone else and what does it mean?

To put it simply, those listed in the leak are accused of hiding their money in Panamanian banks. Doing this helps those who want to avoid taxes do just that, avoid their country's taxes. Each of their governments cannot keep a watchful eye on money that is not in their system.

Though it is possible that some of those who did actually hide their money in Panama just did so to evade taxes, there is also the possibility that some of the money was obtained illegally and thus hided to avoid a trail.

The leak includes business leaders, politicians as well as celebrities and is causing the world to focus on the corruption of the entire global financial system. At this point no Americans have been named in the leak.

All of the information, totaling to 2.6 terabytes of documents, came from the Panamanian law firm Mossack Fonseca though it is not known at this time who is responsible for the leak.

The law firm released a statement following the leak to confirm that the practices were “legal and common for companies to establish commercial entities in different jurisdictions for a variety of legitimate reasons”which do not necessarily equal criminal action.