New EU registers to tackle money laundering
EU member states may soon have to maintain registers containing companies’ ultimate owners under new European rules to tackle money laundering.
EU member states may soon have to maintain registers containing companies’ ultimate owners under new European rules to tackle money laundering.
The European Parliament’s Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs committees endorsed a deal in late January that will affect both corporate and legal entities as well as trusts.
Under the agreement, EU member states will have to keep central registers containing information about the ultimate ‘beneficial’ owners of corporate and other legal entities, as well as trusts. The registers will be open to scrutiny both to authorities and to people with a ‘legitimate interest’, such as investigative journalists.
The proposal was first agreed by Parliament and Council negotiators late last year and is aimed at tackling money laundering and tax evasion as well as terrorist financing. It is designed to give additional bite to the fourth anti-money laundering directive.
A European Parliament press release said the central registers would be accessible to the authorities and their financial intelligence units without any restriction as well as to “obliged entities” such as banks conducting their customer due diligence duties.
They would be able to get access to details such as a beneficial owner's name, month and year of birth, nationality, country of residence and details of ownership.
As for journalists and the public, they would have to demonstrate a "legitimate interest" in suspected money laundering, terrorist financing and in predicate offences that may help to finance them, such as corruption, tax crimes and fraud.
The central register information on trusts will be accessible only to the authorities and ‘obliged entities’.
The creation of such registers were not envisaged in the European Commission’s initial proposal for the fourth anti-money laundering directive but were included by Member of European Parliament’s in negotiations. The text also requires banks, auditors, lawyers, real estate agents and casinos, among others, to be more vigilant about suspicious transactions made by their clients.
The deal still needs to be endorsed by the full European Parliament, either this month or in April, and by the EU Council of Ministers. Member states will then have two years to incorporate the anti-money laundering directive into their national laws.
Economic and Monetary Affairs Committee rapporteur Krišjānis Kariņš said, "For years, criminals in Europe have used the anonymity of offshore companies and accounts to obscure their financial dealings. Creating registers of beneficial ownership will help to lift the veil of secrecy of offshore accounts and greatly aid the fight against money laundering and blatant tax evasion”.
Civil Liberties Committee rapporteur Judith Sargentini added, "The new rules will provide much greater transparency of the shadowy business structures that are at the heart of money laundering schemes, as well as schemes used by businesses to avoid their tax responsibility".
ICC Commercial Crime Services’ Financial Investigation Bureau (ICC FIB), which conducts enquiries and investigations into money laundering and fraud for its members, is encouraged by this development.
An ICC FIB spokesman said, “The requirement for greater transparency, which banks need in their customers’ activities and transactions should be welcomed by financial institutions."