Today, the European Parliament and the Council of the EU agreed on new measures to fight money laundering. Instead of granting public access to who owns companies and trusts, the final deal leaves it up to EU Member States to determine who will have access to the information.
“It is disappointing that amidst financial secrecy scandals and promises for more transparency, the EU fell short of allowing the public to see who is behind anonymous shell companies and trusts. The European Parliament fought tooth and nail for public access, but now it will be up to member states individually to meet that standard and show they are serious about cracking down on corruption”, says Tamira Gunzburg, ONE Brussels director.
The measures agreed today include establishing a central register of who owns and controls companies and trusts. In the case of companies, the information will be accessible to those with a ‘legitimate interest‘. This could include journalists and NGOs, but it will depend on national legislation. For trusts, no such access is foreseen in the directive.
The European Parliament had been calling for both registers to be publicly accessible, but Member States such as Germany blocked this. Although the UK has already committed to implementing a public register for the owners of companies, it was among those Member States who did not want trusts to be included.
Tamira Gunzburg continued: “Everyone has a legitimate interest in knowing who is hiding behind anonymous shell companies. We will hold Member States to that standard and urge them to open up their forthcoming national registers to the public.”
Public disclosure of who is behind anonymous shell companies and trusts, which are often used to siphon illicit funds out of developing and developed countries alike, would have allowed citizens to follow the money and root out corruption. Yet the final deal leaves it up to EU Member States to determine who will have access to the information.
The law also allows Member States to grant companies an exemption if they prove that publication of their owner’s name puts them at risk of kidnapping or fraud for example. Here, too, the ball is in Member States’ court to ensure this is not used as a loophole.
Lead MEPs Judith Sargentini and Krišjānis Kariņš, backed by other group leads such as Ana Gomes, Rina Ronja Kari and Petr Ježek, worked hard to get the Council to agree to this register for beneficial owners. Initially, most Member States were opposed. In recent months, Member States such as Denmark, Sweden and the Netherlands started showing support for public disclosure, but the nearing end of the Italian Presidency meant that there was tremendous pressure to land a deal sooner rather than later.
Tamira Gunzburg continued: “We have come a long way. The EU measures decided today go further than what G20 ministers managed to agree to just one month ago. But with $1 trillion still being siphoned out of developing countries every year, the EU must keep up efforts to shine a light on all aspects of these harmful practices.”
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- The deal reached today must still be approved by Coreper, the Economic & Monetary Affairs Committee and the Civil Liberties Committee, before it goes to the full Parliament for a plenary vote next year.
- According to calculations by ONE, 1 trillion dollars are siphoned out of developing countries every year as a result of corruption, tax evasion, and other illegal activities.