On March 15, 2017 the European Parliament’s Committee of inquiry to investigate alleged contraventions and maladministration in the application of Union law in relation to money laundering, tax avoidance and tax evasion (Hereafter: PANA) released an ex-post impact assessment of the cooperation between Financial Intelligence Units in fighting tax crimes.
The Directorate-General for Parliamentary Research Services (DG EPRS) Ex-post Assessment Unit (IMPT) was requested, by a PANA Coordinators’ decision of 12 October 2016, to provide a study on: Fighting tax crime: ex-post evaluation of the cooperation between Financial Intelligence Units (FIUs) at the European and international level.
The study is divided in two parts:
(1) an opening analysis prepared in-house by the DG EPRS Ex-post Assessment Unit (IMPT) that covers EU FIUs and the EU legal framework; and
(2) an outsourced comparative analysis that focuses on FIUs in Canada, France, Switzerland and the UK.
The opening analysis aims at providing an assessment of the EU legal framework as regards EU FIUs and analyses their existing capacities to tackle tax-related crimes. The analysis therefore examines the extent to which the provisions related to FIUs in the third Anti-Money Laundering Directive – that were to be implemented by the Member States by December 15 2007 – have been properly implemented. While the study takes the changes brought by the adoption of the fourth Anti-Money Laundering Directive adopted in 2015 into account, it refrains from drawing premature conclusions on proper implementation of these new provisions, since the Member States are to transpose the fourth Directive by the end of June 2017. The analysis of the EU framework is based on several sources that were extremely useful in assessing the capacities of EU FIUs to perform their tasks and exchange information at EU and international level. The opening analysis naturally takes account of the outsourced comparative analysis.
The comparative analysis examines four particular FIUs and investigates their differences and the challenges they encounter as regards transnational cooperation on financial intelligence. The sample chosen, which gathers FIUs from two EU Member States (France and the United Kingdom), one FIU from a European country with a major financial centre (Switzerland) and one North American FIU (Canada), intends to provide a better understanding of the current state of play in relation to the role, powers and activities of FIUs in fighting financial crime in general and tax crimes in particular. The comparative analysis relies both on qualitative and quantitative data. It draws on document analysis (official reports and statistics from the Egmont Group, the EU, the FATF and FIUs under examination), and semi-structured interviews with officials from FIUs and Europol.
The key findings are summarized as follows:
EU FIUs have different structures, resources and powers across the Member States. These differences affect the ways in which EU FIUs collect and analyse information, and ultimately impact exchange of information between them:
(1) At a practical level, time delay in responses to requests affects FIUs cooperation, and the quality and content of the replies to requests are not necessarily helpful.
(2) Not all EU FIUs are empowered to approach banks and financial institutions with requests for information. This means that the capacity of some FIUs to request information from reporting entities on behalf of foreign FIUs can sometimes be hampered.
Concerning tax-related crimes, specific issues arise:
(3) Tax crime was only recently recognised as a predicate offence of money laundering (in the fourth AML Directive). Although the directive explicitly indicates that differences between national law definitions of tax crimes shall not impede the ability of FIUs to exchange information, cooperation between FIUs can still be refused on the grounds of the significant differences across Member States as to how predicated offences to money laundering are defined and criminalized.
(4) In some EU Member States, mutual cooperation between FIUs and tax authorities still lacks clear agreement and/or memorandum of understanding to ensure tax compliance.
(5) Not all EU FIUs have proper access to information on bank account holders and beneficial ownership. Central registers of bank accounts are not necessarily in place in all EU Member States. While the fourth AML Directive encourages EU Member States to put such systems in place, this is not mandatory. As regards access information on beneficial owners, the obligation to set up central registers for this purpose laid down in the fourth AML Directive has not to date been fulfilled in all Member States. As a result, only a few EU FIUs can obtain such information at present. This lack of dedicated centralised national databases is an area of concern shared by many EU FIUs.
Click here to be forwarded to ex-post impact assessment as available on the website of the European Parliament.
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