Some EU member states are obstructing the fight against money laundering, tax avoidance and evasion, the EP committee of inquiry into the ‘Panama Papers’ leaks concludes.
EU member states that received a special mention were the United Kingdom, Luxembourg, Malta and Cyprus.
Co-rapporteur Jeppe Kofod (S&D, DK) said: “Europe needs to get its own house in order before it can end the scourge of systematic money laundering, tax avoidance and evasion. It is clear that urgent reform is needed, not least within the Council Code of Conduct Group on business taxation. The citizens of Europe have a right to know what their national governments are doing – and not doing – in the Council to help end harmful cross-border tax practices.”
A point that was made in many of the hearings was that many countries weren’t implementing the current rules on money laundering.
Co-rapporteur Petr Jezek (ALDE, CZ) said that the practices revealed by the Panama Papers were not inevitable: “Our conclusions are clear: had the EU and its member states played a more proactive role in the past, the problems revealed by the Panama Papers could have been avoided. They arose because EU legislation against money laundering and exchange of tax information was not properly implemented.”
The Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion (PANA) approved its final report by 47 votes to 2 with 6 abstentions on Wednesday, after an 18-month probe into breaches of EU law in relation to money laundering, tax avoidance and evasion.
The committee also approved the inquiry recommendations, by 29 votes for to two votes against, with 18 abstentions.
Daphne Caruana Galizia
The meeting opened with a minute’s silence as a tribute to Maltese investigative journalist Daphne Caruana Galizia, who was killed in a car bomb explosion on Monday. Caruana Galizia gave the committee evidence about her work on the Panama Papers at a meeting in February 2017 in Malta.
An oral amendment brought forward by David Casa (EPP, MT) condemning the “assassination” of the journalist, was overwhelmingly supported. The text described Caruana Galizia as being “on the frontline of the battle against money laundering”.
EP President Antonio Tajani has invited the family of the journalist to Parliament’s plenary session next week in Strasbourg to join MEPs in paying their respects to Caruana Galizia.
Lack of political will among EU countries
MEPs expressed regret that “several EU member states featured in the Panama Papers.” They pointed to the “lack of political will among some member states to advance on reforms and enforcement.” This, they suggested, had allowed fraud and tax evasion to continue.
The committee was sharply critical of the secrecy surrounding the work of the Council’s Code of Conduct Group and highlighted how moves to counter tax evasion are often “blocked by individual member states”. It wants the Commission to use its authority to change the unanimity requirement on tax matters.
Common definitions of tax havens
The committee backed a call for a common international definition of what constitutes an Offshore Financial Centre (OFC), tax haven, secrecy haven, non-cooperative tax jurisdiction and high-risk country. It gave overwhelming backing to a call for the Council to establish by the end of this year a list of EU member states “where Non-cooperative Tax Jurisdictions exist”.
The committee members also supported a proposal that any entity with an offshore structure should have to justify to the authorities their need for such an off-shore account.
The committee stressed the need for “regularly updated, standardised, interconnected and publicly accessible beneficial ownership (BO) registers”. It also called for proposals to close loopholes which allow for aggressive tax planning as well as more dissuasive sanctions at both EU and national level against banks and intermediaries “that are knowingly, wilfully and systematically involved in illegal tax or money laundering schemes”.
The Panama Papers revealed the important role of liberal professions arguing that provisions should not just apply to banks, the report states that they should also be subject to public supervision. MEPs from the European People’s Party tried to maintain the support for self- regulation by lawyers, tax advisors and notaries but were voted down.
The setting up of the Inquiry Committee was triggered by the leak of personal financial information, collectively known as the Panama Papers, which revealed that some off-shore business entities had been used for illegal purposes, including fraud and tax evasion.
The Inquiry Committee’s final report and recommendations will be put to a final vote by the full Parliament as a whole in Strasbourg in December.