ECOFIN and the AMLD review

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

Laundering euros [Images Money/Flickr]

The Council would be smart to embrace outsiders that can keep an eye out for irregularities in beneficial ownership information, writes Koen Roovers.

Koen Roovers is the Financial Transparency Coalition’s European Union (EU) Lead Advocate. You can follow him on Twitter @K_Roovers.

The Financial Transparency Coalition has been following the review of the European Anti-Money Laundering rules (AMLD) closely. One of our key campaigns, the need for more transparency around those that own and control companies—known as beneficial ownership disclosure—is among the most important changes that are up for consideration. In a so-called trilogue (behind closed-door negotiations between European parliamentarians and diplomats), this reform is entering a crucial phase. Unfortunately, it seems that the negotiations on the proposed transparency measures have got stuck, with both sides unwilling to budge. At this point, it seems only high-level commitment can break through the stalemate, which is why we have written to the EU’s Ministers of Finance, ahead of tomorrow’s ECOFIN Council.

A quick recap: in March, the European Parliament voted 643 to 30 in favour of registers that are publicly accessible. There’s a long list of reasons why making the registers public would be a wise course of action. It would allow citizens, journalists and civil society to hold businesses accountable, make it much easier and quicker for law enforcement—both within and outside the EU—to follow the criminal money trail, and allow businesses to understand who they are partnering with, supplying to, or buying from. Moreover, it would improve the quality of information by allowing as many eyes as possible to spot mistakes or discrepancies.

However, after lengthy discussions between officials—united in a ‘Council’ working group—a stance seems to be emerging that would seriously compromise the accessibility of the proposed transparency measure. They all agree that law enforcement agencies should have access. Most agree that companies that are legally obliged to perform ‘Know Your Customer’ vetting on potential clients should also have access to the data in order to carry out their important work. But some disagree that there is a need to extend access to other types of researchers. And quite frankly, that’s odd. Why? Well, one of the reasons why there’s so much high-level attention around issues of financial transparency and tax justice is because of the painstaking work of investigative journalists and campaigning organizations to put it on the agenda.

It is only weeks ago that the International Consortium of Investigative Journalists blew the lid off a scandal that has been brewing for years. The state of Luxembourg has been engaging with transnational enterprises from around the world in secretive tax rulings that significantly limit their tax liability abroad. For many, this kind of fiscal dark art was nothing new, but it had never been fleshed out in the open. And once it was, the final figures were simply astonishing. The result: a storm of protest around the world, not least by some prominent EU neighbors of Luxembourg, who would like to see this obvious fiscal loophole plugged.

The Council would be smart to embrace outsiders that can keep an eye out for irregularities in beneficial ownership information. This is why we think the ‘legitimate interest test’ the Council proposes should be substituted by full public access. Keeping it in could turn out to be highly restrictive for several reasons, as it would require evidence of wrongdoing in advance of checking the register (perpetuating the reliance on leaks), it can jeopardize the timely access to information for investigators (inside and outside the EU), and each country can set different standards for legitimate interests, incentivizing the dishonest to simply relocate.

Last but not least, setting up such a system of review of people’s request for information constitutes a huge cost burden. And at a time when governments are cash strapped, such a costly and unneeded measure should be a no go.


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