The European Parliament committees responsible for economic affairs and civil liberties voted yesterday (20 February) with an overwhelmingly majority in favour of a tightening of EU rules against money laundering. The draft law also covers “foreign politically-exposed persons”, in what lawmakers billed the "anti-Mubarak" amdendment.
Lawmakers agreed to establish public registers of beneficial owners that will list the ultimate proprietors of companies, foundations or trusts.
The aim is to put an end to anonymous companies often used to evade taxes, or in the worst cases to channel illegal funding for criminal activities.
The United Nations estimate that money laundered globally in one year can amount up to 5% of global GDP. In Europe, the volume of laundered money can reach €600 billion every year, according to a study cited by the Socialists and Democrats group in the European Parliament.
MEPs endorsed the key principles of the Commission proposal but decided to sharpen it by agreeing the establishment of public registers in a bid to create a further deterrent to illegal activities.
Publicly accessible registers are expected to empower civil society organisations and the press in the pursue of illegal activities, in support to law enforcement authorities.
45 MEPS voted in favour of the revised text, with only one voting against and one abstaining. The draft law will now be put to a vote at the Parliament’s March plenary, allowing negotiations with member states to start in the second half of 2014.
The draft law introduces new requirements for financial institutions in their due diligence activities, but gives member states the authority to decide whether minor activities may be exempted from the tighter compliance-checking obligations.
Financial transactions companies have warned against the higher costs of the new requirements, warning they may reduce consumers' appetite to use payment services.
Financial industry representatives warned the new law may have unintended consequence by increasing underground financial activities or the higher recourse to cash, which is an easier instrument for illegal transactions than electronic money.
Casinos and other gambling activities are also included in the scope of the draft rules for their obvious potential in money laundering activities, “but decisions to exclude other gambling services posing a low risk are left to member states,” the MEPs underlined.
The new text adopted by MEPs extends the scope of the EU Commission’s proposal to cover so called “politically-exposed persons”, such as politicians or judges, who are easy targets of corruption attempts because of their job.
The Parliament committees added to the list “foreign politically-exposed persons”, in a provision that is mainly targeted against wealthy foreigners who hide their illegal revenues behind shell companies or trusts.
The former Egyptian president Hosni Mubarak is known for having perceived a salary of $800 a month, which did not prevent him from saving millions of Swiss francs in Swiss banks, according to Transparency International.
“Heads of state, members of government, members of parliaments or similar legislative bodies, and supreme court judges are among those included” in the list, reads a Parliament press release.