- Information on beneficial owners of companies available to all
- European “politically exposed person” subject to same due diligence as those from outside of EU
- Additional reporting roles for Commission
In a bid to shed light on the true ownership of letterbox companies, any citizen will, in future, be able to access data about the beneficial owners of firms which operate in the EU.
The move could help quash the corrupt use of letterbox companies created to hide wealth and avoid paying taxes -- a practice which received widespread attention in the wake of the Panama Papers. This prospective change in the law follows a provisional agreement reached between the Council, European Commission and Parliament, Friday, and is part of the update to the EU’s Anti-money laundering directive.
An additional measure agreed after nine rounds of negotiations would also open up information on the beneficial owners of trusts to those who can demonstrate a “legitimate interest”. This would make information on trusts available to investigative journalists and non-governmental organisations (NGOs).
The Anti-money laundering directive is part of the EU’s armoury in the battle against money laundering and tax evasion. This latest agreement marks the fifth update of the directive and follows the terrorist attacks in Paris and Brussels in 2015 and 2016, as well as the Panama Papers leaks.
Other measures agreed as part of the update include:
- Tougher criteria for assessing whether third countries pose an increased risk of money laundering (including the possibility of sanctions and an obligation to report suspicious transactions)
- Protection for whistleblowers who report money laundering (including the right to anonymity)
- An extension of the directive to cover all forms of tax advisory services, letting agents, art dealers, electronic wallet providers and virtual currency exchange service providers
- “Politically exposed persons” (individuals who have been entrusted with a prominent public function and so who are considered at higher risk for potential involvement in bribery and corruption) will continue to be subject to the same enhanced customer due diligence obligations as PEPs from third countries
The agreement also gives the Commission a number of additional reporting responsibilities including the obligation to report on Member States‘ action in the face of complaints regarding non-compliance on anti-money laundering rules. It has also been tasked with reporting on the cooperation between Member States in the area of anti-money laundering and possible improvements to that cooperation.
The agreement must now be endorsed by the full plenary of the Parliament and by the Council. Member States will then have 18 months to transpose the agreement into national law after its publication in the Official Journal of the EU.