European Parliament, Draft Report on the inquiry on money laundering, tax avoidance and tax evasion

From the European Parliament (24 page pdf report)

http://www.europarl.europa.eu/cmsdata/122787/2017-06-30%20Draft%20report.pdf

Conclusions 

The Committee of Inquiry into Money Laundering, Tax Evasion and Tax Avoidance -

136. Concludes that the underlying problem embedded in the Panama Papers is the moving of money between different jurisdictions, both offshore and onshore, and that as long as these practices are tolerated all other efforts will have only limited impact; 137. Finds that through the use of trusts, shell companies, tax havens and complex international financial structures, some multinational companies and high net worth individuals have successfully shielded their fortunes from, for example, the tax authorities and others with legitimate financial claims against them, thereby rendering themselves immune by positioning their wealth in a legislative vacuum; 138. Concludes that the lack of cooperation and coordination on different pieces of legislation with regard to tax evasion, tax avoidance and money laundering is a systemic problem; 139. Concludes that some Member States tend not to provide relevant information in the desired quantity and quality and in general do not seem to exert genuine efforts to crack down on tax avoidance and tax evasion; 140. Recalls that transparency and exchange of information are key instruments in fighting tax evasion, tax avoidance and money laundering; 141. Concludes that the EU legislation in force was not sufficient before the Panama Papers revelations and was not always enforced effectively, thus allowing intermediaries to formally fulfil their duties, such as CDD and other reporting obligations, while circumventing the spirit of the rules; notes that since then a number of reviews have been carried out, for example on the DAC and the AMLD, and that new legislative proposals have been presented, such as country-by-country reporting and the regulation of intermediaries; 142. Concludes in particular that there has been a significant gradual improvement in terms of having a register of UBOs with accessibility based on legitimate interest; underlines that the ongoing AMLD revision aims to enhance the powers of the EU FIUs and to facilitate their cooperation, but that the scope is still too limited and that there is a need to share financial information to tackle all economic crime, but also to trace the proceeds from fraud-linked activities; 143. Concludes that proper identification of UBOs remains a key obstacle to stopping illegal tax avoidance schemes and that the international nature of financial flows and company structures uncovered by the PANA Committee exacerbates this problem; 144. Stresses that the creativity of tax avoiders is faster than the formulation of legislation and that intermediaries and enablers tend to stay on the right side of the law through creative compliance; highlights in this regard the use of regulatory mismatches between countries as a key enabler of such practices; 145. Concludes that wealth management remains a largely unregulated profession and that binding international rules and standards should be established to better regulate and define this group; 146. Notes that taxes should be levied at the point and place of profit creation; concludes that the actions and financial constructions revealed in the Panama Papers successfully circumvent this basic principle and that a ded; 147. Concludes that this was made possible by insufficient implementation of legislation by the Member States and insufficient enforcement by the Commission; 148. Notes that the Commission is not sufficiently equipped in terms of resources to ensure full enforcement of EU legislation against money laundering, tax evasion and tax avoidance; 149. Concludes that FIUs are key instruments to fight money laundering; observes, however, the differing structures across the EU and the fact that they are not sufficiently equipped with personnel to cope with their tasks, including examining the increasing number of STRs driven by new legislation, and that they can deal only with a fraction of the problem; 150. Concludes that sanctions are not always applied or deterrent enough in relevant cases; 151. Concludes that on the basis of the PANA Committee findings, several cases of maladministration of EU legislation can be identified, namely regarding the DAC, the AMLD and the list of third countries with strategic deficiencies in their anti-money laundering regimes; 152. Regrets the lack of cooperation of certain EU institutions with the PANA Committee; believes that this constitutes a breach of the principle of sincere cooperation; 153. Concludes that the closed and secretive nature of the Council’s Code of Conduct Group on Business Taxation is detrimental to the effective and expeditious formulation, adoption and implementation of vital anti-tax evasion legislation within the EU; underlines, therefore, the need for improved accountability and transparency regarding the actions, statements and positions of the Member States engaged in the group; 154. Deeply regrets that a high number of stakeholders have refused to meet with PANA delegations, or refused to appear before the PANA Committee, or did not answer questions in a satisfactory manner; PE604.514v01-00 24/24 PR\1124430EN.docx EN 155. Concludes, therefore, that a number of questions remain unanswered in order to fully ascertain the scale of this issue and the methods employed in these schemes.