Wednesday

1st Apr 2020

EU parliament wants to blacklist tax havens

  • Panama hats at Malta protest: The massive leak on tax dodging implicated several EU politicians (Photo: Daphne Caruana Galizia)

The European Parliament wants the European Commission to put countries that are considered tax havens on a blacklist that also features countries suspected of money-laundering and terrorism financing.

Last July, the commission published its first blacklist in the context of a new directive aimed at countering money-laundering and financing terrorist.

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Afghanistan, Bosnia, Guyana, Iraq, Laos, Syria, Uganda, Vanuatu, and Yemen were identified as countries with “strategic deficiencies in their AML/CFT [anti-money laundering and counter-terrorism financing] regimes that pose significant threats to the financial system of the Union” .

If a country is listed, financial institutions in the EU are required to “apply enhanced customer due diligence measures when establishing business relationships or carrying out transactions with natural persons or legal entities established in the listed countries”, according to the legislation.

The European Parliament and EU member states have given the commission the power to decide who is put on the blacklist via a so-called delegated regulation, but they maintained veto power.

MEPs decided to approve the first version of the list, but this week also decided to write a letter saying that more countries should be added the next time it is updated - expected to be in October.

A draft letter addressed to justice commissioner Vera Jourova, seen by this website, said the list should be “a broad list of criminal activities, including for example 'tax crime',” mentioning Panama as an example.

The Central American republic came into the public eye recently when a trove of documents showed the extent to which money is stored offshore there.

By not including countries involved in “tax crimes”, the commission “puts European institutions in a difficult position as it can unintentionally be understood as an endorsement to those regimes that would not be in line with its own assessment criteria”, the MEPs wrote.

The EU commission was not immediately available for comment.

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