New EU law to force companies' ultimate beneficial owners out of the shadows

Anti-corruption campaigners have hailed the agreement as milestone in the fight against tax evasion and money laundering, but have highlighted the fact that trusts will mostly escape scrutiny.

Companies across the EU will be forced to disclose their true owners under new legislation
Companies across the EU will be forced to disclose their true owners under new legislation

Companies across the EU will be forced to disclose their true owners under new legislation enacted in the aftermath of the publication of the Panama Papers.

Anti-corruption campaigners have hailed the agreement as milestone in the fight against tax evasion and money laundering, but have highlighted the fact that trusts will mostly escape scrutiny.

EU member states, including Malta, will have 18 months to transpose the new directive into domestic legislation. The bold move will help end secrecy that facilitates corruption, tax evasion and money laundering.

The revised terms of the EU’s fourth anti-money laundering directive include:

  • A requirement for companies to disclose their beneficial owners in a publicly available register.

  • Data on the beneficial owners of trusts to be available to tax and law enforcement authorities, as well as sectors with an obligation to follow anti-money laundering rules, including lawyers.

  • A requirement for member states to verify beneficial ownership information submitted to their registers.

  • Extending anti-money laundering and counter-terrorism regulations to apply to virtual currencies, provision of tax services and art dealers.

International anti-corruption NGO Global Witness hailed the announcement “in the face of opposition from countries like the UK, Luxembourg, Ireland, Malta and Cyprus,” but criticised the failure to introduce the same requirements for trusts.

Unlike companies, which have separate juridical personalities, trusts are essentially agreements between two or more parties, which has traditionally allowed them to escape aspects of tax and crime legislation.

“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,” said Murray Worthy, a senior campaigner at Global Witness.

Worthy said, however that 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 changes also include new rules on the use of pre-paid credit cards which can be loaded with cash and used online and in shops, bypassing the checks made on debit and credit card payments. French authorities found that the perpetrators of the Paris terrorist attacks had used prepaid cards in their preparations.

Under the revised rules, member states will also have to limit how much can be spent anonymously to €150 in a shop and €50 online.

 

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