MEPs tell EU Commission to expand “blacklist” of states at risk of money laundering to include “tax havens”

Last week the European Parliament considered the European Commission's "blacklist" of countries deemed to be at risk of money laundering and terrorist financing. Companies and individuals from blacklisted countries face more stringent checks (for example from banks), when seeking to do business in the EU. Although not specifically related to tax, as with so many issues is seems, this piece of work has now encompassed the tax avoidance debate.

On 19 January 2017 MEPs voted quite decisively (393 votes to 67, 210 abstentions) to bounce this list back to the Commission, saying that it should be expanded. The text can be found here. This follows the Economic and Monetary Affairs Committee and the Civil Liberties, Justice and Home Affairs Committee also calling for the list to be sent back to the Commission back in December to include countries involved in “tax crimes”.

Fabio De Masi (Vice president of the Panama Papers Inquiry Committee) commented that despite repeated encouragement from the Parliament, the Commission has not delivered, calling the current blacklist “entirely insufficient”

The Commission listed eleven countries, including Afghanistan, Bosnia and Herzegovina, Iraq, Laos, Syria, Uganda, Vanuatu islands and Yemen. It judged these countries to be deficient in countering money laundering and financing terrorism.

The two co-rapporteurs on the underlying legislation commented as follows:

Judith Sargentini voted for the proposal, saying that the Parliament wants the Commission to be more ambitious, insisting that those who facilitate tax avoidance should be on the blacklist as they steal from citizens and countries.

“The strength of the vote reflects the strength of feeling in Parliament about the inadequacy of this current list. We now hope that the Commission will be more ambitious in its revisions, so as to create a blacklist which is fit-for-purpose."

Krišjānis Karins abstained.

“A country should be placed on the ‘blacklist’ only when there is clear evidence of a systematic threat of money laundering and terrorist financing. The Commission needs to have a straightforward and transparent algorithm that can withstand public scrutiny.”

So the Commission is back to the drawing board on this “blacklist”, at exactly the same time as the Commission, in conjunction with the Code of Conduct Group is working on the list of “non-cooperative tax jurisdictions”. In the meantime, the existing MLD blacklist will stay in force.