Saturday

22nd Jul 2017

MEPs demand stronger rules against tax evasion

  • MEPs are demanding full disclosure on people behind trusts and companies. (Photo: Burning Robot Factory)

MEPs are pushing to prevent people from hiding away billions of taxable revenue as part of broader EU reforms to tackle money laundering and tax evasion.

The latest measures, voted through on Tuesday (28 February) in committees dealing with the issue, would require the full disclosure of owners behind trusts and further pry open the beneficial owners of companies.

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Both points have met resistance from EU states who have argued that revealing people involved in trusts may violate privacy and data protection rules. They say that anyone who wants to access such information must demonstrate a "legitimate interest".

The latest vote on the EU's anti-money laundering directive is part of an ongoing saga following its initial adoption in 2015, later revised in 2016 by the EU commission.

The 2016 reforms have yet to reach a final agreement as the EU parliament now prepares to launch inter-institutional talks with member states and the EU commission next month.

MEPs are hoping governments will agree to set up public registries of beneficial owners of companies and trusts, accessible by anyone.

They may find some allies in Austria, who last December was reported by Bloomberg BNA to support "full public access".

Political pressure also appears to be on the side of the EU parliament, following the Panama Paper scandal of 11.5 million electronic files leaked from Panama-based law firm Mossack Fonseca.

Media published the findings last April, revealing offshore holdings of some 140 politicians and public officials around the world.

Tove Maria Ryding, tax justice coordinator at the Brussels-based European Network on Debt and Development, said in a statement that the MEP vote on public registers for both companies and trusts shows "they are serious about bringing an end to the kind of scandals that were exposed in the Panama Papers."

Dutch Green MEP Judith Sargentini who is helping steer the file through the EU parliament said the plan also includes imposing stiffer sanctions on those who violate the rules.

Terrorism and Malta

The proposed amendments on the bill also aim to tackle financing of terrorism and cracking down on criminals who use virtual currencies or pre-paid cards to shuffle money around undetected.

EU states want national Financial Intelligence Units to have the ability to crack open the identities of people who use digital money.

Some 70,000 virtual currency transactions are carried out daily, according to the European Central Bank.

Latvian centre-right MEP Krisjanis Karins, who is also co-leading the file with Sargentini, said restrictions on virtual currencies are needed to addresses terrorism threats.

"The behaviour of criminals has not changed. They use anonymity to launder their illicit proceeds or finance terrorism," he said in a statement.

The Council, representing member states, had already formalised its position on the directive in late December.

MEPs launched an inquiry committee in the wake of the Panama Papers scandal to investigate abuse throughout EU states.

Some of those named in the leaks included Malta's prime minister's chief-of-staff Keith Schembri.

MEPs in the inquiry visited the country last week to probe tax evasions schemes but were denied a meeting with Schembri.

With Malta at the helm of the EU's rotating six month presidency, some have cast doubt on its commitment towards a strong EU anti-money laundering directive.

Far-left Portuguese MEP Miguel Viegas, who was among those in Malta, accused the country of setting up structures that siphon away billions of tax revenue owed by multinationals to other countries.

"In this regard, Malta is not different from other EU countries such as Luxembourg or the Netherlands," he said.

EU states set to oppose tax transparency bid

A compromise text by the Slovak EU presidency is proposing to water down the commission's plans to allow public access to the names of those who own offshore accounts.

EU tightens money laundering rules

Banks will now have 48 hours to freeze assets in accounts spread across Europe flagged as belonging to people aiming to use it for terrorist operations.

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