EU Plans To Tighten Anti Money Laundering Regulations

After the release of the Panama Papers, the EU is increasing its focus on the fight against tax evasion by tightening its legislation. The terms of the new anti money laundering directive, which will force companies to disclose their true owners, has been welcomed by campaigners.

These terms include companies being made to disclose their true owners on a public register, making data available to tax and law enforcement authorities and ensuring all EU member states verify all the information submitted to the registers. All members states will be give 18 months to enforce the new legislation.

Laure Brillaud, the anti-money laundering policy officer at Transparency International EU commented “This is a big breakthrough and confirms that full transparency of corporate ownership is now the global standard against which other countries will be judged. The EU deserves credit for taking this bold leap to end the secrecy that facilitates corruption, tax evasion and other crimes.”

Global Witness welcomed the move, saying that “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.”

The new legislation will also cover the way that pre-paid cards are used by companies. Currently companies can use cards, which include those issued by MasterCard and Visa, to make payments both online and in stores without the same checks that are required for debit and credit cards. This is also beneficial for anti-terrorism units, as it was found that following recent attacks in France that prepaid cards were used by attackers during their preparations.

When the revised rules come into place, member states will have to enforce limits on how much can be spent anonymously both online and in retail stores. In future it will be a lot more difficult for countries in the EU to avoid transparency on transactions in overseas territories, including those which are considered to be tax havens according to the leaked Panama Papers which revealed how companies hide assets and wealth to pay less tax. 

Former UK prime minister David Cameron said that “the cancer of corruption is developing, metastasising and becoming more commonplace, more complex, more multi-layered, elusive and ingrained”. He also defended the accusations that the UK has allowed companies to use overseas territories to hide wealth, and that moves towards greater transparency have been resisted by the government.

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