New EU measures against terrorism financing and money laundering
Wednesday, 06 July 2016
photo credit: ICIJ
The Commission adopted yesterday (5 July) a proposal to amend the Anti-Money Laundering Package. The proposal includes measures on anti-money laundering to counter terrorist financing and increase transparency about who really owns companies and trusts.
The proposal is the first initiative to implement the action plan for strengthening the fight against terrorist financing and is also part of a broader drive to boost tax transparency and tackle tax abuse in the wake of the Panama Papers scandal.
“The proposals will help national authorities to track down people who hide their finances in order to commit crimes such as terrorism,“ first Vice-President Frans Timmermans said.
“Member States will be able to get and share vital information about who really owns companies or trusts, who is dealing in online currencies, and who is using pre-paid cards. Making public the information on who is behind companies and trusts should also be a strong deterrent for potential tax-evaders.”
The Commission states that the adoption of the Fourth Anti-Money Laundering Package in May 2015 marked a significant step towards improving effectiveness of the EU’s efforts to combat the laundering of money from criminal activities and to counter the financing of terrorist activities.
Member States have committed to implement the amended package more swiftly than initially planned, at the latest by the end of 2016.
As regards countering terrorism financing the Commission announced a number of measures.
The Financial Intelligence Units in the member states will have access to information in centralised bank and payment account registers and central data retrieval systems. The use of anonymous payments through pre-paid cards will be reduced by lowering thresholds for identification from €250 to €150 and widening customer verification requirements.
The list of checks applicable to countries with deficiencies in their anti-money laundering and countering terrorist financing regimes will be harmonized. Banks will have to carry out additional checks on financial flows from these countries. The list of countries will be formally adopted on 14 July.The extra checks are expected to prevent, detect and disrupt suspicious transactions.
The Panama Papers revealed that complex ownership structures have been used to hide links to criminal activities and tax obligations. To prevent tax avoidance and money laundering the Commissions proposes full public access to ownership registers.
Member States will make public certain information of the beneficial ownership registers on companies and business-related trusts. Information on all other trusts will be included in the national registers and available to parties who can show a legitimate interest.
The beneficial owners who have 10% ownership in certain companies that present a risk of being used for money laundering and tax evasion will be included in the registries. The threshold remains at 25% for all other companies.
Commission also announced separately that it would explore ways for information on beneficial ownership to be automatically exchanged between Member States’ tax authorities.
Tamira Gunzburg, Brussels Director at the ONE Campaign, welcomed the proposed amendments to the Anti-Money Laundering Package but added that a dangerous loophole has been left: only commercial trusts would have to reveal their so-called ‘beneficial owners’ to the public.
“All other trusts could keep them secret to all but those who can prove a ‘legitimate interest’. Not only are some of these other trusts already being used for money laundering, exempting them from disclosure risks making them even more attractive to those wishing to hide the proceeds of corruption or terrorist financing.”