EU Agrees Money Laundering Transparency Reforms, but Full Access Denied

Issued by Transparency International Liaison Office to the European Union



Transparency International welcomes new landmark legislation to tackle money laundering and anonymous shell companies in the EU. The revisions to the 4th Anti-Money Laundering Directive agreed by the European Parliament and EU Council are an important step forward in the fight against corruption, and go far beyond the principles agreed by G20 leaders in November. However, concerns remain that the final legislation will fall short of full transparency of the real ‘beneficial’ owners behind companies and trusts demanded by anti-corruption activists worldwide. The identities of many individuals involved in grand corruption have been concealed through the use of anonymous companies, trusts and other entities.

Under the new legislation full access to company beneficial ownership data will be granted to law enforcement and relevant government bodies in central registers established by EU Member States. Partial access will be provided to the public such as investigative journalists and NGOs if they can prove a legitimate interest. A drawback of the compromise would be the creation of a new layer of bureaucracy to manage requests, which could also slow down investigations. For trusts,  information will be collected in closed centralised registers available only to government bodies and will not be available to the public.

“Yesterday’s decision to provide access to those with an interest in following the corruption money trail is a big step forward. However a system which limits access is likely to be more cumbersome, expensive and could be used as an excuse to deny meaningful public access. It remains unclear how countries will assess who has a ‘legitimate interest’,” said Carl Dolan, Director of Transparency International EU. “The compromise may end up replacing one big loophole with many small loopholes.”

According to research by Global Financial Integrity, nearly $70 billion flowed illegally into or out of emerging EU economies in 2011. At the same time global detection rates for illicit funds by law enforcement are estimated to be as low as 1 percent for criminal proceeds and the seizure rate at 0.2 per cent (UNODC). According to an analysis by the World Bank and UN of over 200  grand corruption cases, 70 per cent involved corrupt politicians, anonymous companies and trusts to obscure their identity.

“Requiring the public to prove a “legitimate interest” is contradictory to the idea of transparency, and places all the burden on the public, rather than potential criminals who treat the European financial system like their personal launderette,” said Nienke Palstra, EU Policy Officer.

With the agreement of the Directive, EU Member States have two years to transpose the new standards into their national legislation. Transparency International encourages EU Member States to follow the UK, France, Denmark and the Netherlands in their plans for full public disclosure of company beneficial owners.

The final agreement is an improvement on the European Commission's original 2013 proposal in that it provides for centralised registers that includes  information on the beneficial owners of trusts and other legal entities as well as companies. The negotiating teams from the European Parliament and the Italian Presidency of the EU Council should be congratulated on ensuring these important revisions will become EU law.


For any press enquiries please contact

Nienke Palstra
EU Policy Officer
P: +32 2 89 32 457
E: .(JavaScript must be enabled to view this email address)

Latest

Support Transparency International

On trial for corruption: Teodoro Obiang, son of the president of Equatorial Guinea

In the first case brought by civil society in France, Teodoro Nguema Obiang Mangue, the son of the president of Equatorial Guinea, is on trial for corruption.

Corruption Reporting Award: Honouring investigative journalism

For the third year Transparency International has sponsored the Corruption Reporting Award as part of the One World Media Awards. Check out this year's winner, Stealing Paradise, a shocking investigation into corruption, intimidation and the sale of idyllic islands in the Maldives.

Glass quarter full? The state of global anti-money laundering in four charts

Out of the hundreds of commitments governments have made to fight corruption and money laundering, one of the easiest to keep track of is to implement the global anti-money laundering standards.

Ukraine takes important first step towards ending corporate secrecy

Ukraine has taken a first step in the fight against corporate secrecy and corruption by agreeing to share data on who ultimately owns and controls Ukrainian companies.

Who doesn’t know the Cayman Islands is a great place to hide money? The Cayman Islands

In May, the Cayman Islands government quietly released a report that just about acknowledges the country's deficiencies at thwarting money laundering.

Your ideas welcome: help us set higher standards in state-owned companies

We need your help to draw up principles for fighting corruption in state-owned enterprises. Please share your ideas!

Brazil: Open data just made investigating corruption easier

All of the official documentation of from Brazil’s biggest corruption scandal – Operation Car Wash or Lava Jato – is now available to search easily online.

Social Media

Follow us on Social Media

Would you like to know more?

Sign up to stay informed about corruption news and our work around the world