European Parliament Rejects Money Laundering Blacklist Over Tax Evasion Concerns

European lawmakers Wednesday called for a more ambitious effort to identify nations outside of the European Union vulnerable to financial criminals after rejecting for the second time a proposed blacklist they claimed did not include any high-profile tax havens.

Members of two parliamentary committees said a list of 11 nations put forward by the bloc’s executive branch, the European Commission, again incorporated a list already kept by the Financial Action Task Force and still excluded nations that facilitate tax-related crimes, which they said give rise to money laundering.

The fourth anti-money laundering directive due to be implemented by EU member states in July requires the executive branch to compile a list of high-risk countries that should trigger more thorough customer and transactional screening by financial institutions.

The 61-7 vote against the blacklist reflected continuing deadlock between the Commission—which claims it lacks the resources for a robust and autonomous assessment to identify countries eligible for the list—and parliamentarians who want a system that also identifies nations that enable bank secrecy and corporate opacity.

Wednesday’s vote marks the second time this year that EU lawmakers have rejected the Commission’s plan. In January, the European Parliament voted 393-67 in favor of blocking finalization of the earlier list.

The amended list voted on Wednesday included two changes—the dropping of Guyana and the inclusion of Ethiopia—that followed similar changes in the FATF designations. The Commission said that the list represented its autonomous assessment of evidence from a number of sources, but claimed it only had five or six staff to do the work and would inevitably rely on FATF evidence gathering and analysis.

“The Commission says it doesn’t have the capacity, it doesn’t have resources,” said Portuguese MEP Ana Gomes, vice chair of the European Parliament’s committee on money laundering and tax evasion. “This is the problem. If we’re serious about money laundering, you have to find those resources and not just rubber stamp FATF.”

The full European Parliament is expected to debate the issue again this month.

Parliamentary demands for greater corporate transparency and a more robust blacklist come after leaks of millions of records last year from offshore law firm Mossack Fonseca exposed how companies and trusts formed in the British Virgin Islands, Panama, Hong Kong and other jurisdictions enables the movement of suspicious funds.

None of those countries are included in the FATF and EU lists, which designate North Korea, Iran and other minor economic centers such as Vanuatu, Afghanistan, Yemen and Laos.

Critics contacted by ACAMS characterized the dispute between the executive and legislative branches as irrelevant so long as the European Union refrains from fully enforcing existing laws against money laundering.

“The question is: what would be the advantage of the EU doing it if FATF is doing it anyway?” said Michael Levi,professor of criminology at Cardiff University.


By Paul Peachey , May 4, 2017



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