Representatives of financial transactions services have criticised harshly the EU's draft legislation to fight money laundering which will go through its first parliamentary vote today (20 February) and enjoys the support of the anti-corruption champion, Transparency International.

The European Commission proposal, tabled in February last year, is aimed at tightening EU rules on financial transactions in a bid to step up the fight against money laundering and terrorism funding.

One of the main elements of the proposal is the introduction of a mechanism to name the beneficial owners of companies, in order to prevent the illicit activities which are often carried out under anonymity.

The proposal also includes requirements to increase customer due diligence and tightening the rules obliging financial companies to identify their clients and the legitimacy of their activities.

After months of talks, MEPs have agreed on a few amendments to the original text, which do not challenge the pillars of the proposal and are described as "balanced".

But the industry directly affected by its provisions is arguing that it may significantly increase costs without bringing the expected benefits.

A range of financial transactions companies, including Western Union, a money transfer service, PayPal, an online money transfer service, and MasterCard, a payment cards service provider, have also underlined in a conference held yesterday in Brussels that higher costs may reduce consumers' appetite to use their services.

They claim the text may have perverse effects by increasing underground financial activities or recourse to cash, which is an easier instrument for illegal transactions than electronic money.

Transparency International, the non-governmental organisation focused on countering bribery and graft, considers the current proposal "a major blow against corruption," according to its director for Europe, Carl Dolan.

Today, the economic and monetary affairs committee and the civil liberties committee of the EU Parliament will hold a joint meeting to approve the text agreed after months of talks.

The draft law is likely to be voted by the plenary of the European assembly before the European elections in May, but is unlikely to be agreed with EU member states within the mandate of the existing Parliament, as acknowledged by one of the rapporteurs of the text, MEP Krišjānis Kariņš, from the centre-right European People's Party (EPP).