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Carthy calls for tougher bank regulations to combat offshore secrecy

13 February, 2017 - by Matt Carthy MEP

Sinn Féin MEP Matt Carthy has called for tougher regulation of banks to combat the promotion of money-laundering, tax evasion and tax avoidance.

Carthy has quizzed representatives of Nordea bank, including former Central Bank of Ireland regulator Matthew Elderfield (now head of Compliance with Nordea), at a hearing of the European Parliament’s inquiry into the Panama Papers in Brussels.

The Sinn Féin MEP said:

“Last Thursday we heard evidence from the ICIJ that Nordea’s Luxembourg branch had directed around 400 clients to Mossack Fonseca, and that Nordea had the sixth highest number of companies incorporated with Mossack Fonseca.

“We also heard that despite what appears to be clear evidence of criminality by Nordea - including the falsification of documents - revealed in the Panama Papers, the only measure taken in response was the conduction of an internal investigation in which the bank unsurprisingly found itself ‘not guilty’ of promoting tax evasion.”

Carthy questioned the Nordea representatives on the outcome of its internal investigation.

Addressing Matthew Elderfield during last Thursday's hearing, Carthy said:

“We can make many criticisms of the nature of the internal investigation that Nordea launched after the Mossack Fonseca data was leaked – the fact that it was conducted in-house in collaboration with a business law firm and KPMG, the secrecy and discretion involved in such a process, and the substitution of this limited and biased mechanism for an open court in ‘exonerating’ Nordea from findings of criminality.

“But one of the most glaring flaws is that it only investigated those offshore structures with a direct link to Mossack Fonseca or the jurisdiction of Panama – 129 out of a total of 562 offshore structure customers.”

The Sinn Féin MEP asked if any progress had been made on the bank’s own recommendation to review the remaining 400 offshore structures for possible tax evasion; Nordea representatives responded by saying this process had not yet begun.

Carthy said today:

“Unfortunately Nordea is not alone. The Panama Papers data shows more than 500 banks registered 15,000 shell companies through the Panamanian law firm.

“We have repeatedly heard details of the role of intermediaries – especially banks and law firms – in moving wealth offshore during the Panama Papers inquiry.

"Banks typically direct their customers to specialised law firms such as Mossack Fonseca in order to assist clients to set up an offshore structure.

"I find it very difficult to see what legitimate reasons there could be to move capital offshore. Offshore structures are used to conceal wealth from state tax collectors, or to launder cash.

“Clearly the existing ‘Know Your Client’ and customer due diligence rules are insufficient to combat this behaviour. Likewise, the proposed revision to the EU’s Anti-Money Laundering Directive falls short when it comes to lifting the veil on beneficial ownership

“I will be making a submission to the European Commission's consultation regarding the regulation of intermediaries this week.”

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