Tuesday

16th Oct 2018

MEPs vote to abolish secret company ownership

  • City of London: The commission estimates the EU economy loses at least €120 billion every year, most of through money laundering (Photo: avail)

A European Parliament vote on Thursday (20 February) to set up public registers to identify company owners has been hailed as ground-breaking by pro-transparency groups.

MEPs in the civil liberties and economic committees backed the European Commission’s anti-money laundering directive but then added a public register provision to help crack open shell companies and trusts.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

“We are enlarging the whole anti-money laundering directive from crime fighting to tax evasion and I think that is very important,” Dutch Green MEP Judith Sargentini, one of the parliament’s lead negotiators on the file, told this website.

Often based offshore in places like Bermuda, Jersey, and Gibraltar, shell companies are legal entities set up to hide an owner’s identity.

The World Bank estimates 70 percent of the proceeds of crime, corruption, and tax evasion are laundered through the murky corporate structures.

Around 1 percent of the criminal proceeds are detected.

The seizure rate by police is even lower, according to the UN Office on Drugs and Crime, with EU governments and developing countries losing out in billions of tax revenues every year.

To scale back the losses, MEPs want each member state to list the ultimate owners of companies and trusts in publicly accessible online business registers. The registers would be interconnected.

MEPs from across the political divide support the plan.

“We got all political parties from GUE to EPP and ECR voting for public registers on ultimate beneficial owners,” said Sargentini, referring to leftist, centre-right and rightist groups in the parliament.

Banks and financial institutions, auditors, lawyers, accountants, notaries, tax advisors, asset managers, trusts and real estate agents would have to provide the names to national authorities to put in the registers.

“They need to verify the identity and sometimes that means piercing various layers,” says Nienke Palstra, a policy expert on anti-money laundering at Transparency International.

Current methods to disclose the details can be costly and time intensive.

Organisations are currently required to file a report, whenever they encounter something suspect, to a national authorities’ financial intelligence unit (FIU).

Insiders say the units do not always follow up on the reports or co-operate well with other units in different member states.

“There are some serious doubts whether or not the current system - with those FIUs which have to follow up on all the suspected activities - is efficient,” says Koen Roovers at the Brussels-based Financial Transparency Coalition.

But with interlinked registers in each member state, organisations over time would have a better starting point to verify the beneficial ownership of potential clients.

It also makes it easier for an FIU in one member state to access the data in another.

The public nature of the registers is meant as an extra layer of scrutiny to ensure the data is up to date and correct.

Changes in ownership would have to be communicated to the national authorities within 30 days. People who provide inaccurate or false information could face criminal sanctions.

The draft bill is set for a vote in the plenary in March. MEPs are hoping to launch inter-institutional negotiations in autumn.

Both the UK and France support the registers. But resistance has emerged from Germany.

“I hope Germany with the new CDU-SPD government might change its tune and come aboard with the Brits and the French,” noted Sargentini.

EU to donate criminal assets to charity

Criminal suspects who flee the country or who are ill could still have their illicit assets confiscated and donated to charity, under new rules endorsed by MEPs.

EU passport sales create 'proud Maltese citizens'

Malta says its 'Golden Visas' scheme attracts families that want to become "proud Maltese citizens". Meanwhile the sales to Russian nationals, and others, have generated over €700m in revenue.

Opinion

Interpol, China and the EU

China joins a long list of countries - including Russia - accused of abusing Interpol's 'Red Notice' system to harras activists and dissidents.

Stakeholders' Highlights

  1. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  4. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  6. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Latest News

  1. EU ministers struggle to deal with Poland and Hungary
  2. Commission tried to hide details of 'WiFi4EU' glitch
  3. Brexit standoff continues before EU summit
  4. ASEM: Global Partners for Global Challenges
  5. How Juncker's 'do less' group concluded EU should not do less
  6. Cyprus and Russia: Association of Cyprus Banks responds
  7. Orthodox church split just tip of Putin's crumbling 'soft power' in Ukraine
  8. Daily reality in Western Sahara - and how EU can protect it

Stakeholders' Highlights

  1. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  2. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  3. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  4. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  5. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  6. Mission of China to the EUChina: Work Together for a Better Globalisation
  7. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  8. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  9. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  10. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  11. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  12. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs

Join EUobserver

Support quality EU news

Join us