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MEPs back public register for company ownership

MEPs back public register for company ownership

Campaigners praise vote in the Parliament

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The European Parliament on Tuesday (11 March) backed rules that would create online public registers of the beneficial owners behind all European Union companies and trusts.

The vote was welcomed by campaigners. “The current system has bred a vast network of anonymous shell companies, which are used to funnel money that’s been gained through illegal practices, or embezzled from a government’s coffers,” said Koen Roovers, EU adviser for the Financial Transparency Coalition.

Eurodad, a non-governmental organisation focusing on debt and development, said that the MEPs’ proposal would make it harder for foreign leaders, such as Viktor Yanukovych, the recently ousted former president of Ukraine, to use European companies to hide ill-gotten assets.

Judith Sargentini, a Green Dutch MEP, who is one of two MEPs leading the European Parliament’s response to the European Commission’s 2012 proposal, introduced the amendment about public registers. MEPs’ first reading position was backed by 653 MEPs and opposed by 30.

Members of the public wishing to consult the database would be required to register online, but this is less onerous than demonstrating an interest in the information, an option that was long preferred by Krišjanis Karinš, a centre-right Latvian MEP who is the other lead MEP on the Parliament’s response to the proposal.

Member states have yet to agree their position on the proposal. Denmark, Estonia, Germany, Luxembourg, the Netherlands and Poland are opposed to mandatory central registers of beneficial ownership, arguing that other methods can provide equal transparency, whereas the United Kingdom and France support it. David Cameron, the UK’s prime minister, has publicly made the case for such registers, mirroring reforms planned in the UK. However, Cameron does not want the rules applied to trusts, a legal entity peculiar to common law jurisdictions that provide a legal framework for one person to hold property on behalf of another.

Money laundering

The proposal would also update 2005 rules to combat money laundering, extending them to the gambling sector and requiring greater financial institution scrutiny of cash payments of €7,500 or above, half the previous threshold of €15,000.

An estimated €600 billion is laundered worldwide each year to fund terrorist or criminal activities or to evade taxes.

Authors:
Nicholas Hirst