As Italy takes over EU presidency, what will happen to beneficial ownership registers?

July 2nd, 2014

In the process to revise the EU Anti-Money Laundering Directive (AMLD), European Parliament voted overwhelmingly to approve the creation of public registers of information on the beneficial owners (real owners) of companies, trusts, and other legal entities in the EU. This would greatly aid the fight against illicit financial flows produced from corruption, trafficking, tax evasion, and other activities, which are often perpetrated with the help of anonymous companies with hidden ownership.

However, the European Parliament’s input is only one piece of the puzzle.

Other institutions, including the EU Council, are still weighing in on the matter. Eventually, the European Commission, Council, and Parliament must rectify their differences in preferred legislation through what is called a “trialogue.”

Today, the FTC released an opinion piece in the EU Observer about the process, and why it’s vital that Europe be a leader on open data, especially beneficial ownership information. Reminders of how anonymous companies can proliferate illicit financial flows are all too frequent.

From the article:

For months, Ukraine’s political situation has made headlines. Many Ukrainians believe the turmoil is a direct consequence of a shady concoction of political cronyism and financial secrecy that allegedly allowed those close to power to funnel billions out of the country.

Investigations by journalists and anti-corruption activists have documented, for example, how the presidential palace compound, presidential planes, hunting lodges and palaces in Crimea have been owned by European companies that are set up to obscure who really profits from these assets.

Italy has just assumed the presidency of the EU, and it’s vital that Italian leadership is felt on the issue. While European institutions (EU Council and Parliament) are at odds over some vital issues with the AMLD, they have a chance to lead the way on financial transparency.

While it won’t be easy, as the parliament and member states are clearly at odds over key issues, all the ingredients for a ground-breaking new anti-money laundering regime are on the table.

If the European Parliament sticks to its recipe, EU countries agree to a watertight approach to transparency, and the Italian Presidency shows the ambition that is needed for the EU to lead, we might see agreement to publicly disclose beneficial ownership of companies across the EU.

Money launderers don’t stop at borders. In fact, by incorporating companies overseas, they actively use borders to hide assets from public scrutiny. Therefore, financial transparency solutions should be international. And what better way than to make public who incorporates where and when?

Read the full article here.

Written by Christian Freymeyer

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