The European Parliament speaks with one voice when it comes to strengthening European rules to combat money laundering and terrorist financing, notably through the creation of a dedicated European authority, as proposed by the European Commission at the end of July.
“There is a will to move forward in this House”, said Paul Tang (S&D, the Netherlands), chair of the Standing Subcommittee on Taxation, on Wednesday 20 October, during a plenary debate in Strasbourg.
Before him, representatives of the political groups had criticised the lack of readiness of Member States to act in this area, for example Markus Ferber (EPP, Germany) and José Gusmão (The Left, Portugal) against their respective countries.
Billions of euros from criminal activities transiting through opaque transactions between unscrupulous financial actors have been highlighted as a loss of revenue for public finances. Laura Ferrara (NI, Italy) also referred to the European Court of Auditors’ report that the European supervisory framework is too fragmented and uncoordinated (see EUROPE 12750/13).
Eero Heinäluoma (S&D, Finland) and Mikuláš Peksa (Greens/EFA, the Czech Republic) called for the creation of a European authority dedicated to combating money laundering and terrorist financing.
The latest legislative package in this area, brought forward in July, aims to establish the AMLA authority at EU level in 2023 to coordinate Member States’ actions and ensure uniform application of the rules (see EUROPE 12766/4).
“We expect this new authority to be established in 2023 and to start its activities in 2024. Direct supervision of certain high-risk financial entities will only start in 2026, when the AMLA reaches its full capacity”, said EU Financial Services Commissioner Mairead McGuinness.
Insisting on a uniform application of the rules across the EU, she listed the infringement proceedings opened against Member States that had not correctly transposed previous directives. She promised that the Commission would make greater use of the ‘European Semester’ budget process to encourage Member States to take action against money laundering.
The Commissioner also stressed the transparency of the crypto-assets industry and end beneficiaries to combat shell companies. “In the EU, we need to ensure that registers of final beneficiaries are operational and comprehensive”, she stressed.
As the revelations of the Pandora Papers (see EUROPE 12804/2) have shown, the fights against money laundering and against tax evasion and fraud are intrinsically linked.
After a debate in early October (see EUROPE 12806/14), MEPs adopted a specific resolution on Thursday (578 votes in favour, 28 against, 79 abstentions) in which they call on the G20 countries to “take effective measures to curb tax havens and their business model by effectively banning shell companies” through the introduction of “specific and mandatory criteria for transparency and business activities”.
The European Commission will present a proposal for a directive at the end of the year that will directly address the problem of shell companies. In this regard, MEPs call on the Commission to “develop robust and progressive requirements for real economic substance”.
In narrowly adopting an amendment by The Left group (356 votes in favour, 333 against, 7 abstentions), Parliament believes that the Pandora Papers revelations show how tax havens adapt harmful practices in order to remain attractive for tax evasion purposes, with such adaptation leading to “a race to the bottom and the constant emergence of new tax havens”.
In addition, MEPs deplore the fact that, following the publication of the Pandora Papers, EU finance ministers weakened the EU’s ‘blacklist’ of non-cooperative tax jurisdictions (see EUROPE 12805/4). They note that “two-thirds of the shell companies mentioned in the Pandora Papers are located in the British Virgin Islands, which were never on the blacklist” and were removed in February 2020 from the ‘grey’ list of countries that have made commitments to automatic information exchange. They also condemned the fact that certain American states (South Dakota, Alaska, Wyoming, Delaware, and Nevada) have become “centres of financial secrecy [...] in addition to being renowned tax havens”.
At the previous plenary session, MEPs also made concrete proposals on how to tackle harmful tax practices, such as a thorough reform of the code of conduct on business taxation (see EUROPE 12808/25).
Support for international corporate tax reform
MEPs also welcome the fact that 136 countries have agreed to the recent detailed agreement on international corporate tax reform, which will be based on reallocation of taxing rights (pillar I) and minimum effective taxation (pillar II) (see EUROPE 12808/2).
Speaking at the European Parliament plenary session on Wednesday, Slovenian Foreign Minister Anže Logar and Commissioner McGuinness pledged that the EU Council and the European Commission would do their utmost to meet the “ambitious” timetable for the agreement to enter into force in 2023. Our services are already drafting the directive that will transpose pillar II, Ms McGuinness indicated.
The agreement, which includes all EU and OECD countries, is due to be finally endorsed at the G20 Summit in Rome at the end of October.
The European Parliament also urges the G20 countries to instruct the OECD to launch a new global initiative to revise the automatic exchange of information and to strengthen global governance in the enforcement of anti-money laundering standards.
See the European Parliament resolution: https://bit.ly/3m1I7SP (Original version in French by Mathieu Bion)