The European Parliament and the Council reached a political agreement on the Commission’s proposal to further strengthen EU rules on anti-money laundering and counter terrorist financing on December 15th. This revision of the Fourth Anti-Money Laundering Directive, aims to:
- increase transparency on who really owns companies and trusts by establishing beneficial ownership registers;
- prevent risks associated with the use of virtual currencies for terrorist financing and limiting the use of pre-paid cards;
- improve the safeguards for financial transactions to and from high-risk third countries;
- enhance the access of Financial Intelligence Units to information, including centralised bank account registers.
The proposal was presented by the Commission in July 2016 in the wake of terrorist attacks and the revelations of the Panama Papers scandal, and is part of the Commission’s Action Plan of February 2016 to strengthen the fight against terrorist financing. The text still needs formal endorsement by the European Parliament and the Council, and during the Trilogue meetings several issues remained controversial, in particular questions around giving access to beneficial ownership information of trusts.
Latest amendments to the original 2016 proposal and their implications on the philanthropic and wider non-profit sector still need to be analysed once the final text is available. The sector has repeatedly argued that the concept of “beneficial owners” is designed for the corporate and for-profit/private interest sector. Public benefit organisations however do not have “beneficial owners” since they benefit the general public. The BO concept hence does not fit the public benefit/charitable sector and meaningful application has to be ensured. The sector and others have also raised concerns that efforts have to be taken so to not duplicate existing reporting/registration structures and to ensure that data and privacy-protection rules are taken into account.
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