Tax crimes: special committee calls for a European financial police force

The recommendations adopted by the Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3) range from overhauling the system for dealing with financial crimes, tax evasion and tax avoidance, notably by thoroughly improving cooperation in all areas between the multitude of authorities involved, to setting up new bodies at the EU and global level. The numerous findings and recommendations include:

• Commission to immediately work on a proposal for a European financial police force;
• An EU anti-money laundering watchdog should be set up;
• A global tax body should be established within the UN;
• Great concern about member states’ general lack of political will in Council to tackle tax evasion/avoidance and financial crime;
• Seven EU countries (Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta and The Netherlands) display traits of a tax haven and facilitate aggressive tax planning;
• Golden visas and passports are problematic and should be phased out;
• The cum-ex fraud scheme clearly shows that the complexity of tax systems results in legal loopholes and that multilateral, not bilateral, tax treaties are the way forward;
• Countermeasures should be envisaged against the US if it does not ensure FATCA’s reciprocity;
• The Council should properly assess the situation in Switzerland in order to ensure that no harmful tax regimes are introduced;
• ‘Tax good governance’ clauses should be systematically included in new EU agreements with non-EU countries;
• Whistleblowers and investigative journalists must be much better protected and the US reward system for whistleblowers could be replicated in the EU;
• Malta and Slovakia must do everything they can to identify the instigators behind the murders of two investigative journalists.

The report was adopted with 34 votes to 4 and 3 abstentions. It will now be passed on to the plenary for approval during the second session of March (25 – 28) in Strasbourg (TBC). Quotes The chair of the committee, Petr Ježek (ALDE, CZ), said: “The considerable amount of work achieved by this committee over its twelve-month mandate has shed light on unprecedented issues affecting the banking and financial sectors. The investigations and hearings have helped us draft stronger recommendations, notably on the need to enforce EU AML/CFT legislation better, stricter banking supervision, and enhanced information exchange among FIUs and tax authorities. It is now crucial to maintain pressure for the implementation of our recommendations to the governments and the relevant actors.” The co-rapporteur, Luděk Niedermayer (EPP, CZ), said: “Recent money laundering cases have shown that we urgently need existing AML rules to be better enforced, dissuasive sanctions and a push for improved cooperation and coordination of relevant authorities within and between Member States as well as an active partnership with the private sector. The Committee calls on the EU to lead the global debate on finding a solution to taxing the digitalized economy and ensuring efficient, transparent and fair tax regimes, while maintaining fair and transparent tax competition.” The co-rapporteur, Jeppe Kofod (S&D, DK), said: “Europe has a serious money laundering and tax fraud problem. We have the world’s largest, richest and most integrated single market with free movement of capital, but little to no effective cross-border supervision and 28 differing national anti-money laundering and anti-tax fraud provisions. This creates a string of loopholes, which are far too easy for criminals to abuse to launder vast amounts of money as in the Danske Bank-scandal, or design highly profitable tax theft schemes like CumEx. We need tougher EU-level regulation, harsh sanctions on banks facilitating financial crimes, and a new European financial police within Europol.” Background Following continued revelations over the last five years (Luxleaks, the Panama Papers, Football leaks and the Paradise papers), the European Parliament decided to establish a Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3), on 1 March 2018. The report adopted today concludes the committee’s year-long mandate, which saw it hold 18 hearings dealing with particular topics of interest, 10 exchange of views with finance ministers and European Commissioners, and four fact-finding missions – to the US, the Isle of Man, Denmark and Estonia, and Latvia.