23/03/17

EU Battle Over New Anti-Money Laundering Law Enters Final Phase

EU member countries and the bloc’s Parliament faced off on final terms for amending the EU Anti-Money Laundering Directive, a day after a report alleged that more than $20 billion from Russia was laundered through anonymous shell companies between 2010 and 2014, reports Bloomberg.

The debate revolves around the European Union’s commitment, made in the wake of year-old Panama Papers revelations, to crack down on shell companies and trusts, with member countries and the central government seeking common ground on key issues concerning company beneficial owner transparency rules and mandatory public registries of trusts accounts.

Russian Money Laundering

Underlining the importance of the March 21 negotiations was an Organized Crime and Corruption and Reporting Project (OCCRP) report March 20 alleging the billions from Russia was laundered through EU-based banks and businesses.

“Once again, it appears that European banks have been duped into accepting astonishing amounts of corrupt cash thanks to anonymous shell companies operating in the EU,” said Transparency International Director Carl Dolan in a March 20 statement on the report. “The EU has a rare opportunity to put an end to the kind of corporate secrecy that enables the corrupt to hide their stolen assets.”

Although the European Commission proposed strict rules last July calling for EU countries to publish registries of commercial trusts, EU national governments stripped the provision from the bill when it passed the Council of Ministers in December. Instead, member states backed registries listing trust owners that would be open only to those with “legitimate interests.” Data privacy concerns were the reason member states determined that mandatory public registries of trusts weren’t acceptable.

The EU Data Protection Supervisor backed those concerns in a report issued in January.

European Parliament Demands

However, the European Parliament earlier this month approved a version of the legislation that calls not only for mandatory public registries of trusts but also for the beneficial owners of companies. It also backed detailed rules that prevent directors or other company employees from being used to hide beneficial owners.

“The public register on ultimate beneficial ownership makes transparent who hides behind opaque structures and shell companies, which have been used in this case,” Judith Sargentini, a European parliamentarian from the Netherlands and one of the law-making body’s chief negotiators, told Bloomberg BNA March 22. She was referring to the OCCRP report.

“Member state competent authorities clearly need the help of the public to uncover the complex web of companies that use European banks to launder billions of dollars of criminal money, Sargentini said. “That is why we will fight hard to convince member states in the current revision of the anti-money laundering directive to have a public register.”