PANA com­mit­tee calls for in­creased fo­cus on vir­tual cur­ren­cies, new tech­nolo­gies such as Fin­Tech

The Malta Independent on Sunday - - NEWS -

He­lena Grech The Euro­pean Par­lia­ment’s PANA Com­mit­tee has ap­proved draft rec­om­men­da­tions calling for in­creased scru­tiny and reg­u­la­tion of emerg­ing tech­nolo­gies, in­clud­ing vir­tual cur­ren­cies and Fin­Tech. The com­mit­tee also ap­proved a re­port delv­ing into the find­ings of an 18-month probe into breaches of EU law in re­la­tion to money laun­der­ing, tax avoid­ance and tax eva­sion.

The com­mit­tee was set up fol­low­ing the Panama Pa­pers reve­la­tions the LuxLeaks scan­dal.

As the Mal­tese gov­ern­ment con­tin­ues to fo­cus on up-and­com­ing tech­nolo­gies such as crypto-cur­rency, blockchain tech­nol­ogy and fi­nan­cial tech­nol­ogy – bet­ter known as Fin­Tech – the Euro­pean Par­lia­ment’s PANA Com­mit­tee is ac­tively calling for an in-depth anal­y­sis of the risks such tech­nolo­gies pose.

One par­tic­u­lar rec­om­men­da­tion on money laun­der­ing reads: “Calls for in­creased po­lit­i­cal and reg­u­la­tory fo­cus on emerg­ing risks re­lated to new tech­nolo­gies and fi­nan­cial prod­ucts, such as derivatives, SWAPS and vir­tual cur­ren­cies.”

In a sep­a­rate rec­om­men­da­tion, un­der the head­ing ‘Banks’, the com­mit­tee “calls for a thor­ough anal­y­sis iden­ti­fy­ing new tech­nolo­gies and fi­nan­cial prod­ucts which could po­ten­tially be used as a ve­hi­cle for money laun­der­ing; based on this anal­y­sis, calls for money laun­der­ing pro­vi­sions to be in­cluded in all new pro­pos­als ad­dress­ing such new tech­nolo­gies, in­clud­ing Fin­Tech.”

Malta’s fo­cus on emerg­ing tech­nolo­gies co­in­cides with grow­ing frus­tra­tion at an EU level with the tax im­pu­ta­tion sys­tems of a num­ber of mem­ber states, in­clud­ing Malta, which has re­peat­edly come un­der fire for its ef­fec­tive five per cent cor­po­rate tax, of­fered to for­eign busi­nesses that reg­is­ter in Malta, as well as for al­low­ing the iden­tity of peo­ple be­hind such busi­nesses to be shel­tered by nom­i­nees.

In the 2018 bud­get, spe­cial men­tion was made of the cre­ation of a blockchain hub in Malta. This could pro­vide an op­por­tu­nity for the Mal­tese gov­ern­ment to li­aise with the EU and help shape the EU reg­u­la­tory frame­work such tech­nolo­gies would be op­er­at­ing un­der.

Some EU mem­ber states are ob­struct­ing the fight against money laun­der­ing, tax avoid­ance and eva­sion

Lack of po­lit­i­cal will

Mem­bers of the PANA Com­mit­tee re­marked that “some EU mem­ber states are ob­struct­ing the fight against money laun­der­ing, tax avoid­ance and eva­sion.”

The com­mit­tee ex­pressed its re­gret that a num­ber of EU mem­ber states had fea­tured in the Panama Pa­pers, point­ing out a “lack of po­lit­i­cal will among some mem­ber states to ad­vance on re­forms and en­force­ment.”

In ad­di­tion, the com­mit­tee took aim at the EU Coun­cil’s Code of Con­duct Group for its se­crecy. This group is made up of tax of­fi­cials from each mem­ber state and is in­tended to dis­cuss tax-re­lated is­sues, in­clud­ing the abo­li­tion of tax mea­sures that con­sti­tute harm­ful tax com­pe­ti­tion and the pre­ven­tion of new mea­sures that would have a sim­i­lar ef­fect.

The PANA Com­mit­tee pointed out that, within the group, “moves to counter tax eva­sion are of­ten blocked by in­di­vid­ual mem­ber states.” It called on the EU Com­mis­sion to “use its author­ity to change the una­nim­ity re­quired on tax mat­ters.”

On mem­ber state fi­nan­cial in­tel­li­gence units (FIU), such as Malta’s Fi­nan­cial In­tel­li­gence Anal­y­sis Unit (FIAU), the com­mit­tee rec­om­mends har­mon­i­sa­tion of each mem­ber state’s sta­tus and func­tion­ing of its FIU in or­der to fa­cil­i­tate the ex­change of in­for­ma­tion.

The com­mit­tee “be­lieves that to be more ef­fi­cient, all EU FIUs should have un­lim­ited ac­cess to in­for­ma­tion from obliged en­ti­ties as this would al­low all FIUs to re­quest in­for­ma­tion from re­port­ing en­ti­ties on be­half of for­eign FIUs.”

It em­pha­sised “the need for com­mon rules on the in­de­pen­dency of in­sti­tu­tions in charge of en­forc­ing rules as re­gards tax fraud and money laun­der­ing, as well as the need for full in­de­pen­dence of law en­force­ment bod­ies in the fol­low-up of FIU re­ports.”

A com­mon def­i­ni­tion on ‘po­lit­i­cally ex­posed per­son’, ‘tax haven’ and ‘non-co­op­er­a­tive ju­ris­dic­tion’ have been called for to avoid any grey ar­eas.

The com­mit­tee mem­bers also sup­ported a pro­posal that any en­tity with an off­shore struc­ture should have to jus­tify to au­thor­i­ties their need for such an ac­count.

Rec­om­men­da­tions fo­cus on money laun­der­ing, in­ter­me­di­aries, banks, lawyers, ac­count­ing, trusts and fidu­cia­ries, third coun­tries, de­vel­op­ing coun­tries, whis­tle-blow­ers and in­ter-in­sti­tu­tional co­op­er­a­tion.

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