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Money laundering negotiations failed: Member States refuse to take consequences after Panama Papers


Today the last negotiation (trialogue) between the European Parliament, Council of Member States and European Commission failed to strike a deal for the 5th reform of the EU anti-money laundering directive (AMLD). The European Parliament voted in February 2017 an ambitious position to curb money laundering and financial crimes like tax evasion. The Parliament has been negotiating with the Maltese presidency in order to agree an improved legislative framework.

 

MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:

 

“It is embarrassing to see the Member States putting national special interest above the fight against financial crimes. The loopholes in the enforcement of existing money laundering rules are a threat to European security and favours tax evasion.

 

It is unacceptable that member states want trusts to be regulated more lightly than companies even if they serve the same purposes to administer private wealth.

 

Lawyers, notaries and corporate service operators have to enforce anti-money laundering rules as strictly as banks. They have to be strictly and independently supervised.

 

The Council even demanded to weaken rules for politically exposed persons, so that the Maltese members of government would potentially no longer be subject to enhanced customer due diligence.

 

The Member States are even refusing to establish real estate registers which allow to find hidden wealth of criminals. The UK, France, Italy and many other Member States have national land registers. The German government refuses to come to European standards although Italy has often complained that the German property market is a safe haven for Mafia money.

 

We will put all our efforts into getting a better deal under the coming Estonian presidency. Member states should become serious to fight financial crime.”

 

You can find the strong demands included in the negotiating mandate of the European Parliament here:

http://www.sven-giegold.de/2017/european-parliament-takes-on-financial-crime-with-tough-proposals/

 

Please find below an overview of the state of the negotiations between European Parliament, Commission and Council after the latest trialogue of 28 June 2017:

Overview of the state of the negotiations as of 28 June 2017

 

Key Issue European Parliament’s position State of the negotiation with Member states & Commission Green assessment

as of 28 June 2017

Public registers on the beneficial owners for companies (Art. 30) Full public access to the information Full public access achieved for profit-making companies through the company law directive. Information on beneficial owners of non-profit companies possibly publicly available under anti-money laundering directive Well done if in the end also non-profit companies are covered
Public registers on the beneficial owners for trusts (Art. 31) Equal treatment with companies – full registration of beneficial owners and public access to the information Commission proposes to distinguish between trusts set up for commercial purposes (in public registers) through company law directive and “private” trusts (only legitimate interest access via anti-money laundering directive).

European Parliament could agree with Commission. Council Presidency cannot accept this division and wants all sorts of trusts to be accessible only through legitimate interest – red line for them

Poor if in the end beneficial ownership information on trusts is kept non-public
Strawmen (Article 3) Nominee directors shall not be accepted as beneficial owners. If the real beneficial owner of an entity cannot be identified, the business relationship has to be terminated Council wants to allow that nominee directors can be identified as beneficial owners. No termination of business relationship in this case Poor. Real beneficial owners shall not be allowed to hide behind strawmen
Politically exposed persons (PEPs) (Art. 20a) Create public lists of national PEPs in all member states Council suggests that PEPs from EU member states should not always be subject to enhanced customer due diligence (COM and EP disagree) Not enough. Council proposal means that EU PEPs like the Maltese members of government found in the Panama Papers owning dodgy shell companies would not be subject to enhanced customer due diligence measures. This would mean a weakening of the existing law
National bank account registers (Article 32a) Establish national registers and interconnect them including information about safe deposit boxes Establish automated national mechanisms such as central registers or retrieval systems. Interconnect only registers. Inclusion of safe deposit boxes is agreed Fail. Member States having only automated retrieval systems would not be included in a European centraly accessible bank account register
Beneficial ownership information for securities, shares and other MifiD instruments (Article 32a – new) Include information on beneficial owners for MiFID financial instruments in the bank account registers Council wants to include beneficial ownership information only for PSD II payment services Insufficient. Criminal money is not only stored in bank accounts but also in financial instruments administered in depots
Beneficial ownership information for real estate and land (Article 32b – new) Creation of national registers for real estate and land with the perspective of interconnecting them Council: connect only national registers which already exist Not enough. Each Member State has to establish a national register. The EU register has to connect all member states’ registers so that criminal money can be found accross borders
Threshold for identification of beneficial owners (Article 3) Natural persons owning more than 10% of an entity shall be identified as beneficial owner Commission proposal is to identify a natural person as beneficial owner if it owns more than 25% of an entity. The treshold shall be reduced to 10% only for passive non-financial entities. Member states insist that 25% remain in any case No progress.
Enforcement of legislation in the member states (Art. 48a – new) Audit power for Commission to assess Member States enforcement of the Directive and implementation of recommendations issued by the Commission Commission suggests to include in the review clause (Article 65) the obligation for the Commission to report every three years on the actions taken by Member States. Council cannot accept audit rights for the Commission Poor. A mere report done from the desk of the Commission is inappropriate to assess whether Member States fulfil their obligations in reality
Supervision of self-regulatory service providers such as lawyers, notaries, tax advisers (Article 48) Member States shall ensure that all obliged entities are subject to independent and strict supervision Commission proposal to draw up national lists of authorities that supervise obliged entities Poor if this was the final result. Panama Papers have shown that self-supervision by lawyers and notaries is not effective at all
Golden Visas (Article 5a) Third country nationals applying for citizenship or residence rights in a Member State (in exchange of capital transfers) should be subject to customer due diligence Council is not keen to agree on the EP text. The Commission understands EP concerns but believes customer due diligence in AMLD is limited to obliged entities (and not to state authorities) Not satisfying. Not discussed enough to find a compromise
High-risk third countries (Article 9) Strengthen the criteria for identifying high-risk third countries and ask Commission to do an independent assessment despite solely relying on external information stemming from FATF Commission proposal in line with demand from the Parliament. Council not willing to compromise Insufficient. We need to improve the criteria to have a real European blacklist of countries with severe money laundering risks. As a minimum, the Commission should actively contribute to the work of FATF, Moneyval and IMF and make its input public
Information on beneficial owners of life insurance contracts (Art. 32c – new) Establish national registers for beneficial ownership information on life insurance contracts which can be used for tax avoidance and money laundering Council not willing to compromise. Unacceptable. We need at least an assessment by the Commission of the dimension of money laundering and tax evasion done through life insurance contracts including a legislative proposal to remedy the problem if needed
supranational money laundering risk assessments (Art. 6) foresee consequences if a Member State does not comply with the recommendations of the Commission on deficiencies in addressing money laundering risk Commission only proposes to require Member States to justify why they do not follow the Commission recommendations Poor compromise proposal. If money launderng risks in Member States persist, the Commission has to have the right to take additional measures including to ask to terminate risky business

Ein Kommentar: “Money laundering negotiations failed: Member States refuse to take consequences after Panama Papers

  1. The biggest Tax Haven in Europe is the Vatican Bank, never been Audited. Cardinal George Pell appointed to clean it up; then sabotaged with Australian Police charges of „Historical Sex Abuse“. Italian Banking Sector in „Toxic Loans“ trouble but not a peep from Vatican Bank.

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