Europe: weakened financial transparency

Preluctant to act against shell companies, after the “Panama Papers” and the succession of tax evasion cases revealed by the press, the European Union (EU) made considerable progress in terms of financial transparency in 2018. The aim was to enable citizens to consult the registers of beneficial owners of companies in each of the twenty-seven Member States. In a great pendulum swing, the Court of Justice of the EU has just put an end to it. On Tuesday, November 22, it invalidated this measure, judging that it is contrary to respect for private life and the protection of personal data, fundamental rights guaranteed by the EU Charter. The judges also considered that this possibility of consulting the registers was disproportionate to the objective of combating money laundering, considering that it does not require the participation of the general public.

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This interpretation of the law risks having the consequence of plunging Europe back into worrying opacity. Luxembourg and the Netherlands, tax havens for multinationals, immediately suspended access to their registers. Admittedly, these will continue to be accessible to the authorities responsible for combating money laundering resulting from tax evasion, corruption or organized crime, as well as to certain professionals such as bankers or notaries. But recent history has proven that the control exercised by citizens, who set themselves up as whistleblowers, by journalists, who investigate matters of public interest, and by non-governmental organizations (NGOs), who denounce criminal behaviour, has contributed to uncovering many scandals at the heart of the EU.

To deny them access to these registers is to deprive them of valuable information for flushing out fraudsters or criminals hiding behind straw men and to restrict their investigative capacities. Without a register opened in Luxembourg, the “OpenLux” survey of February 2021 on the proliferation of artificial societies in this country, led by The world with sixteen media partners, would never have seen the light of day.

Corruption at record levels

This court decision comes as the sources of dirty money, hidden in tax havens, seem very far from drying up, while corruption is at record levels and authorities are struggling to identify, freeze or seize the the money embezzled by the deposed dictators of the “Arab Springs” or that of the Russian oligarchs under sanctions after the invasion of Ukraine. “Front companies are Vladimir Putin’s best allies”had declared, in July, the whistleblower of the “Panama Papers”. “It is impossible to fight against what we do not see”declares, for its part, the NGO Transparency International France.

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This setback in terms of financial transparency comes at a time when the European institutions are negotiating the sixth anti-money laundering directive. We must seize this opportunity to try to rewrite the law and make it more compatible with fundamental rights. It could be a matter of better regulating transparency by clarifying the conditions of access to the registers in order to affirm the legitimate interest of citizens, the media and NGOs in continuing to have access to the registers of beneficiaries. Definitively renouncing this possibility would be excellent news for tax crime and the circulation of dirty money, very bad news for our democracies.

To (re)read: OpenLux: survey on Luxembourg, Europe’s safe

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