The PANA Committee of Inquiry discussed the regulations on tax evasion and money laundering. OECD, UNO and other institutions answered the questions of MEPs.

The Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion, short PANA, met on Thursday, 13 October. The objective of the second hearing was to gain information on international standards, who is setting them, how they work and which loopholes exist. Representatives of international institutions, who deal with money laundering and the exchange of information in tax matters, were present to provide an insight.

Daniel Thelesklaf informed on the monitoring work of MONEYVAL, a body of the EU Council. To guarantee international standards concerning money laundering and terrorism financing, Member States are subjected to peer reviews. He argued that there were perfectly legitimate reasons for setting up offshore companies. Problems would arise when the economic beneficiaries remained unnamed and when intermediaries were not sufficiently regulated and monitored.

Isabelle Vaillant, Director of the European Banking Authority, short EBA, commented that with regard to money laundering and terrorism financing, the EBA is only able to set standards for Member States via recommendations and guidelines. Enforcement mechanisms were also strongly limited. The EBA can only become active, when third parties involve it. Isabelle Vaillant argued that more harmonising and cooperation between Member States was required as cross-border monitoring was still a problem area.

Michel Lennard of the UN Tax Committee brought an international perspective to the hearing. The tax competition between countries and the lack of consideration regarding “tax spillovers” and asymmetries between developed and developing countries would hamper fair taxation. To safeguard state interests and national sovereignty in a globalised world would present a special challenge with regard to tax issues.

Caroline Malcolm of OECD emphasised the progress, which had been made in the past six to seven years for more global transparency in tax matters. She commented that with regard to information exchange on request the peer review process had been very successful and had contributed to improvements. This will also be the OECD's approach in respect of the automatic exchange of information, which shall come into force next year. Alexandra Jour-Schröder of the EU Commission informed that work is currently ongoing to further develop EU standards. The EU had to adopt a pioneering role, which was also necessary for strengthening the Single Market.

Even though all statements honoured the progress of the past years, it was clear that there are still gaps in the system and that until tax havens are finally a thing of the past, much work is still required. For this purpose, AK and ÖGB jointly set up the information and campaigning homepage NotoTaxHavens to ensure that necessary political pressure was put on.

The debate clearly showed that gaining information on economical beneficiaries is a large hurdle. In order to achieve the drying up of the tax cesspit, AK, ÖGB and other allies therefore demand the disclosure of beneficial owners or economic beneficiaries in an international register. In order to guarantee the effectiveness of international regulations, it requires sanctions for financial service providers in case of statutory violations concerning offshore companies. Black lists are needed for countries that are not cooperative; in addition increased cooperation of tax authorities at international level is vital.

Further information:

NotoTaxHavens

Panama Papers investigated by the EU Parliament’s Committee of Inquiry

Written answers by the speakers to the EU Parliament