Today the EU agreed on new rules to reveal the true owners of EU companies and trusts connected to the EU, through changes to the EU Anti-Money Laundering Directive, intended to respond to last year’s Panama Papers revelations. The changes will introduce public registers of the beneficial owners of companies in the EU and yet made little progress on transparency of trusts, with no public registers and no guarantees that even anti-corruption campaigners or journalists would have access to the information.
Responding to the announcement Murray Worthy from Global Witness said:
On companies: “Today’s agreement is a historic step in the fight against corruption. Publicly revealing the real owners behind EU companies will help stop anonymous companies acting as the ‘getaway cars’ for corruption, tax evasion, drug trafficking and arms trading. The European Parliament should be congratulated for pushing for an ambitious deal in the face of opposition from countries like the UK, Luxembourg, Ireland, Malta and Cyprus.”
Trusts: “Today’s deal will make it much harder for the criminal and corrupt to use EU companies, but trusts are an even better ‘getaway car’. They are the ultimate black box - so secretive that even the taxman and the police can’t see who is behind them. Despite numerous scandals showing their use in cases of corruption and tax evasion, the deal reached today will do almost nothing to tackle this.”
On EU implementation: “The real test will be in how the new transparency rules are implemented by the 28 EU countries. For too long, EU countries have dragged their heels in the fight against money laundering and the European Commission must take strong action against laggards. Going further, countries should publish beneficial ownership data free-of-charge and in open-data format, and avoid a patchwork of different registers across the EU.”
On UK Overseas Territories: “The EU has set the new global standard for corporate transparency. These changes pile on pressure for the UK’s tax havens like the British Virgin Islands and Cayman Islands to set up similar public registers, and put an end to their role as financial playgrounds for the corrupt and tax evaders. This raises the stakes ahead of key votes in Parliament in early 2018 that would force these UK Overseas Territories to introduce similar public registers of beneficial ownership.”
On the U.S.: “The EU has further raised the bar for corporate transparency, making the failure of the United States (U.S.) Government to act on beneficial ownership transparency even more concerning. The U.S. has been found to be one of the most popular places for the corrupt to incorporate a company anonymously, and as it stands, the law makes it far too easy for corrupt officials and other crooks to use these anonymous companies to move dirty money into and out of the U.S. Bipartisan legislation has been introduced in the US that would seek to ensure companies formed in the U.S. disclose their real owners. At a minimum, Congress should ensure that this legislation is strengthened to so that the right information is collected, is made available to the stakeholders that need it, and is kept up to date.”
Notes to editor:
- The new EU Anti-Money Laundering rules require the 28 EU Governments to guarantee public access to company beneficial ownership information, although a fee may be charged for access to this information.
- The UK and Denmark have already set up online public registers of company beneficial owners, which are freely accessible to the public. As part of requirements under the 4th Anti-Money Laundering Directive, EU countries are already required to have company beneficial ownership registers in place but until now they were not required to be accessible to all members of the public.
- As many as 17 EU Member States failed to apply the 4th Anti-Money Laundering Directive by the June 2017 deadline and 8 Member States are now facing legal action by the European Commission.
- Amendments have been tabled to the UK Sanctions and Anti-Money Laundering Bill that would require the UK’s Overseas Territories to introduce public registers of beneficial ownership – see amendment 69G
- Although the UK is scheduled to leave the EU by March 2019, the EU Anti-Money Laundering Rules will continue to apply to the UK in the intervening period. The UK may also be subject to the EU’s Anti-Money Laundering rules after this date, depending on the Brexit deal negotiated, as is the case for countries in the European Economic Area (Iceland, Liechtenstein, and Norway).
- Global Witness Briefing: Lessons learnt from the UK register (2017)
- Global Witness Briefing: Don’t take it on trust (2017)
- Global Witness Briefing: The Paradise Papers and Trust Transparency in the EU