EU compromise on shell company regulation is improvement but falls short

From the Financial Transparency Coalition, of which TJN is a member:

EU compromise tightens regulation on shell companies, but without public access, many still in the dark

EU nations agree to national registers of company ownership information, but deal on 4th Anti-Money Laundering Directive doesn’t ensure public access

BRUSSELS — In a deal reached last night, parliamentarians and campaigners have succeeded in making company ownership a fundamental topic. While EU nations have agreed to centralised registers of company ownership information, there is still work to be done to ensure full transparency and public access.

“The amount of progress made over the last year and a half is encouraging, and the fact that all EU nations agreed to centralized registers is a significant step,” said Koen Roovers of the Financial Transparency Coalition. “But with countries like Denmark, France, the U.K. and Ukraine announcing commitments to public access, the European Union should see the writing on the wall.”

Public registers of the real, human owners of companies would aid authorities, journalists, and civil society in tracking down criminals and the corrupt, who use anonymous companies to hijack the financial system. Unfortunately, the compromise reached only guarantees access to members of the public if they can prove a “legitimate interest”.

“Requiring the public to prove a “legitimate interest” is contradictory to the idea of transparency, and places all the burden on the public, rather than the potential criminals who are treating the European financial system like their personal launderette,” said Nienke Palstra of Transparency International.

Although the European Parliament overwhelmingly voted in favor of public registers earlier this year, the final AMLD agreement will not include full public access, and it’s possible that the EU may not review the AMLD again for years.

“In a world where money moves a mile a millisecond, without public registers we’re giving criminals and their enablers years to figure out the best ways to continue exploiting the system,” said Christian Hallum of Eurodad.

“Over 20 years, our investigations have shown the damage done by this loophole,” said Robert Palmer, Money Laundering campaign leader at Global Witness. “It is the getaway car for crime and corruption. In the last two years we’ve seen real progress, with the issue making it onto the global political agenda. We now urge all member states to follow the example of the UK and give the public access to these new registers”.

Note to Editors:

The Financial Transparency Coalition is a global network of over 150 NGOs spanning five continents, 13 governments, and dozens of experts. We work to curtail illicit financial flows through the promotion of a transparent, accountable, and sustainable financial system that works for everyone.

Contacts:
Christian Freymeyer, [email protected], +1.410.490.6850
Verena von Derschau, [email protected], +33.6.95.43.29.28

See also: Global Witness, EU cracks down on anonymous company ownership, but falls short of full transparency