Delayed EP vote crucial for corporate transparency
After delaying the decision for another month while debating a potential compromise, this Thursday MEPs will finally cast their vote on new rules which will be crucial for corporate transparency. As soon as the Anti-Money Laundering Directive came up for review in 2012, Eurodad spelled out
the improvements that could be made. In 2014 they still centre on the urgent need for information about who owns and controls European companies, trusts and other legal instruments which should be made public, preferably online, and in an open data format. This will have enormous benefits not just for fighting crime, but also for stemming the illicit outflow of much-needed resources from developing countries.
Taxation encourages citizens to hold the state to account leading to better governance - as does transparency of financial records. However, anonymous shell companies and trusts play a role in activities that undermine this concept due to the fact that they are being used as tools to launder money, concealing the identity of corrupt individuals and irresponsible businesses involved in activities including the trafficking of arms, drugs and people, the theft of public funds, and tax evasion. This robs governments, in both developed and developing countries, of resources that could otherwise be invested in improving public services and stimulating inclusive economic growth. It is time they are exposed. Although rising up the political agenda at the EU and globally, the wide-ranging acknowledgement of the economic and human costs of tax evasion and illicit financial flows facilitated by corporate secrecy and the need to address this has not yet been properly reflected in legislation.
Raising more revenue domestically has also become a reoccurring theme in development cooperation
debates and a stated aim of EU decision makers
. The acknowledgement of the importance of domestic resource mobilisation has entailed belated recognition of the positive role of taxation for raising revenues to fund sustainable and equitable development.
The European Commission released its rather un-ambitious proposal
on money laundering almost one year ago. In recent months there has been a fierce debate in the European Parliament (EP), not about whether or not there should be registers in general, but whether or not the registers proposed by the Parliament’s rapporteurs should be public. Ambitious legislation is needed to follow through on statements already adopted in the ECON committee earlier this year
and in an EP resolution adopted in Strasbourg this autumn
. This will also send a clear signal to the co-legislator - the Council of Ministers - that the EP means business. On 20th February the ECON and LIBE committees vote jointly on the report and the amendments. This will be one to watch as this will determine the basis of the EP position in future negotiations with the other EU institutions.
The Council should already take note of the broad support for publicly accessible registers of beneficial ownership exhibited by their directly elected co-legislators. Some big member states have voiced
similar support, and one might wonder why more member states have not joined in already.
It is time to realise that tax paying citizens will no longer be satisfied with tough talk but no action
and they understand and recognise the contribution and crucial role that civil society, the media, and brave journalists and whistle-blowers have already made in this debate. These actors have been at the forefront of revealing the secret world of illicit financial flows despite the opacity that rules. The current system and the rules enforced by our legislators are failing to stop these illicit flows. It is time for change.