Thursday

21st Mar 2019

Opinion

Europe can set the standard on anti-money laundering

  • Existing legal structures help hide transaction flows (Photo: Images_of_Money)

Money launderers, corrupt politicians, tax dodgers and traffickers of all sorts rely on the same things to move their ill-gotten gains. They need legal structures that allow them to hide their identity.

This often happens through anonymous companies whose beneficial ownership is hidden. European leaders have a unique chance to curb these shell companies in the ongoing review of the European Union’s anti-money laundering rules.

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

To ensure cash or assets are efficiently processed, corrupt officials and politicians require professional bankers, lawyers and accountants willing to help them.

Either these professionals are negligent because they do not ask too many questions about where money or assets comes from. Or they play a central role in making sure it is impossible to identify where corrupt money originates from and who controls it.

This is borne out by a survey conducted in 2011 by the UK’s Financial Services Authority (now the Financial Conduct Authority).

This concluded that three quarters of the 27 banks it surveyed had inadequate procedures in place to spot and block tainted money.

The FSA study suggested that a fifth of the banks surveyed failed to identify indirect beneficial owners who exercised ultimate control.

The true customer of corrupt assets can hide behind complicated corporate structures (imagine a Russian Matryoshka doll: a company inside a company, inside a company) that makes uncovering the true nature of transactions and their beneficiaries very difficult.

The modus operandi of illicit financial flows are not aberrations, but part of a structural problem.

Governments across the world should take action to tackle this problem by promoting transparency of the ownership and control of companies.

After great pressure from civil society around the globe, such policies were recommended by G8 leaders earlier this year.

The EU could and should play a central part in a global effort to stem the flows of illicit capital by promoting transparency.

EU member state governments and the European Parliament can set the international standard on anti-money laundering rules.

On the table is a proposal that all companies must hold details of their own beneficial ownership.

This is a good start, but only a first step, as law enforcement would still have to approach a company directly for this information, potentially tipping off any suspects.

Instead, the EU could vastly increase the benefits if beneficial ownership information were to be made publicly available.

This would allow for people, law enforcement bodies and not in the least, financial institutions from around the world to look into the ultimate beneficiaries of companies.

Given the cross-border nature of money laundering, only global public scrutiny would help to expose, and, to a large extent, prevent the abuse.

The author works in Brussels for the Financial Transparency Coalition, an international network of not-for-profit groups which advocates transparency and accountability in the global financial system

EU parliament to probe bailout troikas

MEPs are to launch an inquiry into the "non-transparent" work of EU commission, ECB and IMF officials who oversee spending cuts in bailout countries.

Macron is confusing rigidity with strength

Jan Zahradil, EU Commission president Spitzenkandidat for the European Conservatives and Reformists Group, responds to Emmaneul Macron's European vision ahead of the May elections.

A compromise proposal for the Article 50 extension

At this week's summit, EU leaders should extend Article 50 until the May European elections. But they should postpone the effective date of the UK's withdrawal from EU rights, rules, and regulations for another year - to May 2020.

Catalan independence trial is widening Spain's divides

What is really needed is not the theatre of a rebellion trial, but a forensic examination of whether public funds were misused, and a process of dialogue and negotiation on how the Catalan peoples' right to self-determination can be satisfied.

My plan for defending rule of law in EU

EPP leader and prospective next EU Commission president Manfred Weber spells out his plan for dealing with recalcitrant EU member states - ahead of Wednesday's EPP meeting on the vexed issue of Hungary's Viktor Orban and Fidesz.

Italy should capitalise on Brexit

Now that the UK is leaving, Italy can, and should, step up. It is the third largest country and economy in the EU. Spain and Poland follow, but they are significantly smaller economically and population-wise.

The Magnitsky Act - and its name

It is disappointing that so many MEPs in the Socialist and Green group caved in to Russian interests, in fear of challenging a plutocratic regime, by saying 'no' to naming the Magnitsky legislation by its rightful name: Magnitsky.

Stakeholders' Highlights

  1. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  2. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  3. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  4. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  5. Nordic Council of MinistersNordic commitment to driving global gender equality
  6. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  7. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  8. Nordic Council of MinistersNordic talks on parental leave at the UN
  9. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  10. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  11. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  12. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership

Latest News

  1. EPP suspends Orban's Fidesz party
  2. Macron is confusing rigidity with strength
  3. May tosses Brexit spanner into EU machinery
  4. Centre-right EPP faces showdown with Orban
  5. A compromise proposal for the Article 50 extension
  6. US glyphosate verdict gives ammunition to EU activists
  7. Have a good reason for Brexit extension, Barnier tells UK
  8. EU countries push for new rule of law surveillance

Join EUobserver

Support quality EU news

Join us