Nicolas Hirst writes: Members of the public will have the right to find out who is behind complex corporate structures, shell companies and letterbox firms, under new rules to combat money laundering and tax avoidance agreed by European Union lawmakers.
Under the deal, member states will be required to maintain central registers with details of the owners of all companies based in their territory. The registers will be accessible to any member of the public who can show a “legitimate public interest”.
Although member states will have to compile registers of the beneficial owners of trusts, these will not be accessible to the public.
The reforms follow on from the ‘Lux Leaks’ revelations earlier this year that laid bare the tax affairs of hundreds of companies that moved to Luxembourg to enjoy sweetheart tax deals.
Central registers will also make it much more difficult for criminals to launder money within the EU.
Krišjānis Kariņš, a Latvian centre-right MEP, who led negotiations along with Sargentini, said: “For years, criminals in Europe have used the anonymity of offshore companies and accounts to obscure their financial dealings. Creating registers of beneficial ownership will help to lift the veil of secrecy of offshore accounts and greatly aid the fight against money laundering and blatant tax evasion.”
The European Parliament estimates that money laundering affects between 2%-5% of global gross domestic product each year.
Although campaigners welcomed the creation of centralised registers, some expressed concern that they would not be freely available to all members of the public.
“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, a policy officer at Transparency International.
There is also doubt about whether the register will be accessible to non-EU citizens wishing to trace funds hidden by corrupt political leaders.
One motivation for creating the central registers had been the revelation that the son of Viktor Yanukovych, president of Ukraine in 2010-14, had hidden money in a company in the Netherlands – transfers that were revealed because of a detailed investigation by a Ukrainian civil society organisation.
Ukrainian prosecutors have since charged Oleksandr Yanukovych with embezzlement.
The proposal to introduce public registers faced opposition from several member states, in particular Germany. France and the United Kingdom were strong proponents of public registers, although the UK fought hard to ensure that these did not include trusts.
Under the deal, the centralised registers will give details of the owners’ names, country of residence, nationality, month and year of birth, and the nature and extent of the beneficial interest held.
