Carthy welcomes key vote to lift the veil on shell companies
Sinn Féin MEP Matt Carthy has welcomed the vote in the European Parliament on Thursday to proceed with the fifth Anti Money Laundering Directive.
Carthy, a member of the special committee on financial crimes, tax evasion and tax avoidance (TAX3), said:
"This revision of the Anti-Money Laundering Directive imposes additional reporting and customer due diligence obligations on credit and financial institutions, and on government authorities, including making beneficial ownership registers public.
"Shell companies are at the heart of the rotten offshore system that allows financial crime and tax dodging to thrive in anonymity. So the fact that registers of beneficial ownership – that is, the true flesh-and-blood owners of companies – will have to be made publically available is a very significant step forward in the fight to stamp out shell companies, and the money-laundering, tax evasion and tax avoidance that these structures facilitate. At certain points during the negotiations between the Parliament, the Commission and Council, it appeared as though this would not be won due to resistance from some Member States, so the fact that it is included in the final agreement is a big win for those who support transparency.
"This move, when it is implemented, will reduce the extent to which the financial system can be used to disguise illicit financial flows. But at the same time there are troubling problems remaining in the final text, which significantly weakened the Parliament's position adopted last year.
“The top problem is that while beneficial ownership registers of companies must be made public, the beneficial ownership registries for trusts and other similar instruments only have to be provided in limited circumstances where a third party has proven a 'legitimate interest' in gaining access to the information. This is a significant loophole, and our work in examining the Panama Papers and Paradise Papers revelations shows just how commonly trusts are used as a mechanism to conceal suspicious financial flows.
"We also need to close the loopholes of having 'nominee directors' of companies – where a senior manager can be named in the registry when the true owner is unknown – and dividing up company ownership, which are used to hide the true owners. Owning a single share of a company should constitute beneficial ownership, instead of reaching the 25% ownership threshold in the current agreement, which will be easy to evade.
"There is much more to do on this issue, but today's step forward towards fully public beneficial ownership registers for companies in the EU is a big victory for all those battling corruption, tax fraud, financial secrecy and white-collar crime.