The European Parliament adopted yesterday (11 March) an overhaul of EU anti-money laundering rules which includes the introduction of publicly accessible registers for companies and trust owners.
Estimates about the magnitude of money laundering are obviously patchy, but figures converge on a range between 3% and 5% of the world's Gross Domestic Product.
With tighter public budgets and efforts to counter terrorism funding, EU lawmakers have moved the anti-laundering file up their agenda. At the beginning of last year, the European Commission presented a proposal to update and toughen existing rules.
Those were approved by an overwhelming majority of MEPs, who beefed it up with a controversial amendment which introduces public registers for all companies’ owners.
The European Parliament backed up the proposal with 643 favourable votes, while 30 MEPs voted against, and 12 abstained. Member states will debate the Parliament’s text after the May European elections.
'Sunshine is the best disinfectant'
"The public registers will make life more difficult for criminals trying to hide their money," said Judith Sargentini, one of the MEPs responsible for steering the law through Parliament.
In principle, everybody may be free to access the central registers set up in each member state.
By increasing transparency, the new rules are expected to prevent crimes. “Sunshine is the best disinfectant,” said Timothy Kirkhope, of the European Conservatives and Reformists group, speaking during the plenary debate preceding the vote.
The supporters of the proposal believe that more transparency can deter criminals and terrorists from setting up shell companies with the sole purpose of turning illegal money in legitimate funds.
It can also increase the monitoring of dodgy companies, as non-governmental organisations, or the press, may provide informal support to law enforcement authorities in chasing wrong-doers.
The European Commission welcomed the swift adoption of its proposal by the Parliament, but warned against the risks to privacy and data protection which may arise from the public registers proposed by MEPs.
“It is important to ensure adequate guarantees that information is reliable and up-to-date. And we also need to ensure the proper respect of data protection laws,” commented Tonio Borg, the commissioner in charge of consumer protection during the plenary debate.
In past statements, the President of the Eurogroup, Jeroem Dijsselbloem, also said that public registers may pose problems of data protection and privacy. Many member states are likely to echo his concerns.
But the Parliament says those concerns can be addressed. The registers “would be publicly available following prior identification of the person wishing to access the information,” it says in a note.
Moreover, MEPs “inserted several provisions to protect data privacy and to ensure that only the minimum information necessary is put in the register,” the note adds.
A gamble on gambling?
The new rules would increase requirements for banks, financial institutions, auditors, lawyers, accountants, tax advisors and real estate agents, among others, “to be more vigilant about suspicious transactions made by their clients.”
Gambling services are also included in the scope of the revised directive, as they may be used for money laundering purposes.
Casinos will have to abide by similar requirements as banks, “but other gambling services posing a low risk may be excluded by member states”, reads a Parliament note explaining the derogation offered by MEPs to the gambling industry, after heavy lobbying.
But “the Commission prefers not to introduce this derogation, as it may be interpreted too widely and be misused”, said commissioner Borg.
“If exemptions are to be granted, they will need to be risk-based and supported by clear evidence,” said Maarten Haijer, secretary general of EGBA, the association which gathers top European betting and gaming operators.