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By Joe Kirwin
The European Union moved a step closer to requiring the 28 countries in the bloc establish public registries that list the beneficial owners of companies, in a Jan. 29 vote at the Parliament’s Committee for Economic and Monetary Affairs.
EU lawmakers on the panel voted 56-0, with five abstentions, to back the revisions to the current EU Anti-Money Laundering Directive. The measure still must be approved at a final European Parliament General Assembly vote, due in April, and a final vote in the Council of Ministers.
The latest changes would be the fifth since the directive was first approved more than two decades ago.
The vote comes after negotiators from the European Parliament and the EU member states reached an agreement in December that ended nine months of protracted negotiations to resolve differences between the two institutions.
The new terms of the AMLD, if it gains final approval, would require EU member nations to set up public registries listing persons with a 25 percent share or more of a company, with the possibility for a review in three years.
It would also require banks, accountants, and tax practitioners to report discrepancies between the beneficial ownership information in the registers and information they find through their own investigations.
The new EU transparency rules are designed to prevent individuals and companies from using shell companies to hide wealth and evade taxes. The registries will be accessible to persons of “legitimate interest,” which includes tax advocacy groups as well as investigative journalists.
“The agreement could help quash the corrupt use of letterbox companies created to hide wealth and avoid paying taxes—a practice which received widespread attention in the wake of the Panama Papers,” said Robert Gaultieri, an Italian parliamentarian and the chairman of the law-making panel Jan. 29 vote.
Many of the measures in the revised EU AMLD were proposed in July 2016 following the Panama Papers data leaks of 11.5 million files from offshore law firm Mossack Fonseca, with details of wealthy company owners and complex tax schemes they used to hide their gains and to avoid tax.
Besides the mandatory public registries for beneficial owners of companies, the EU agreement would allow persons of “legitimate interest” to access registries listing beneficial owners of commercial trusts. For months, EU member states had refused to allow any access to information about beneficiaries of trusts.
However, the agreement, backed by the European Parliament panel, does give an exemption to public registries when it comes to beneficiary trusts.
Data privacy concerns were a key issue raised by EU member states in refusing to accept that beneficiaries of trusts should be listed in public registries. Those concerns were backed by the European Data Protection Supervisor in an opinion issued in 2016.
In negotiations between EU countries and the European Parliament, issues related to the accuracy of the public registries were addressed, especially since some member states rely on self-reporting.
The agreement would allow EU member states to set up a paywall to access the public registries—a move that groups such as Accountancy Europe, which represents thousands of accountancy firms in the EU, oppose.
“In our view reporting entities should not be charged for accessing the registers whose accuracy they help maintain,” Accountancy Europe CEO Olivier Boutellis-Taft told Bloomberg Tax in a Jan. 30 email statement.
EU member states will have 18 months to put the new AMLD provisions into national law after final voting in March and April.
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