European Parliament takes up strong position in the fight against money laundering and tax evasion

Thanks to the concerted efforts of GUE/NGL, the Greens, S&D and ALDE the Committees on Economic & Monetary Affairs (ECON) and Civil Liberties, Justice and Home Affairs (LIBE) have today voted in favour of a legislative report which marks an important step in the fight against money laundering and tax evasion.

The report is the EP’s answer to the Commission’s amendment to the EU’s anti-money laundering directive (AMLD), released in July 2016 after the Panama Papers revelations. The final text for the updated rules will be settled during the so-called trialogue negotiations between the Council, the Commission and the Parliament in the months ahead.

Some of the most important points the report includes are:

  • full public registers for beneficial ownership information of all companies and trusts
  • a wider definition of beneficial ownership starting with 10% ownership in a company (instead of 25%) and including all people involved in a trust (settlors, trustees, protectors and others)
  • no more loophole to register senior managers as beneficial owners. If, in exceptional circumstances, they can be in the register, they are clearly labelled as what they are
  • prohibiting banks and others to engage in business activities with entities or arrangements where no beneficial owner can be identified
  • general inclusion of tax offences as a predicate offence for money laundering, independently of their national classification (before strongly restricted)
  • stronger rules against high risk third countries and a more ambitious framework for the Commission to set up the anti-money laundering blacklist (click here to read how the blacklist proposed by the Commission was rejected by Parliament in the January plenary thanks to a GUE/NGL initiative)
  • a reinforced sanctions regime for breaches of the AMLD including the need to revoke business licenses of banks and others in cases of repeated breaches
  • the inclusion of financial instruments in the (non-public) bank account and land and real estate register, paving the way to a generalised asset and wealth register

More detailed can be found in our briefing on the AMLD including key vote outcomes.

GUE/NGL Co-Shadow Rapporteur for the AMLD Rina Ronja Kari comments on the outcome of the vote:

“Today’s vote had a very positive outcome and the ground has been laid for a progressive fight against tax evasion. But we still have a long way to go with the seriously-flawed blacklist of high-risk third countries and the lack of criticism of tax havens inside the EU,” continued Kari.

“The Parliament must stand firm on the position that was passed by the Committees earlier today: positions that include a lower threshold for the definition of beneficial owners of letterbox companies; and harsher sanctions on breaches of the requirements that are agreed upon in the directive, and consequently the termination of the business relationship between bank and customer – when the true beneficiaries of a company try to hide behind the straw men,” said the Danish MEP.

GUE/NGL Co-Shadow Rapporteur for the AMLD and Vice-President of the Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion (PANA) Fabio De Masi added:

“The Council is likely to oppose the bold but necessary reforms that we agreed upon in the Parliament. Ministers have to put their cards on the table now and make clear whether they serve the interest of tax and other criminals or the majority of the people.”

“The current Maltese presidency has an abysmal track record in the fight against money laundering and tax dodging at home and is therefore under tight scrutiny.”

“We will make public any attempts to water down those rules during closed-door negotiations. There should be zero tolerance against money laundering and tax dumping,” argued De Masi.

You can find an elaborate article on our approach to ending offshore secrecy here.