Pandora Papers Shed Light On Gatekeepers Of Dirty

MONEYVAL rebuked gov­ern­ments across Europe for fail­ing to com­bat mon­ey laun­der­ing or police lawyers, accoun­tants and oth­er pro­fes­sion­als who facil­i­tate finan­cial crime.

A key European watch­dog has blast­ed the continent’s “par­tic­u­lar­ly weak” defens­es against crim­i­nal and ter­ror financ­ing, declar­ing that few gov­ern­ments ade­quate­ly track the own­ers of anony­mous shell com­pa­nies and none suf­fi­cient­ly police the lawyers and accoun­tants that serve them.

In a new report, MONEYVAL, the Council of Europe’s finan­cial crime research arm, offers a scathing rebuke to gov­ern­ments across Europe for fail­ing to tack­le illic­it mon­ey flows.

MONEYVAL promi­nent­ly cred­its the work of the International Consortium of Investigative Journalists, which for the past decade has pub­lished exten­sive­ly on the flow of dirty mon­ey through Europe to the rest of the world. Citing ICIJ’s 2021 Pandora Papers project, which was based on a giant leak of 14 so-called off­shore ser­vice providers, MONEYVAL said the glob­al jour­nal­ism col­lab­o­ra­tion showed the “grow­ing scale of the mon­ey laun­der­ing threat and the per­sis­tence of launderers.”

In the report’s intro­duc­to­ry sec­tion, Elżbieta Frankow-Jaśkiewicz, MONEYVAL’s chair, said ICIJ’s repeat­ed expo­sure of the role of lawyers and accoun­tants in aid­ing mon­ey laun­der­ing caused the group to focus its atten­tion last year on these so-called “gate­keep­er” pro­fes­sions. ICIJ’s work, she wrote, showed that such pro­fes­sion­als “can be com­plic­it in large-scale transna­tion­al mon­ey laun­der­ing schemes involv­ing cor­rupt politi­cians, as well as high-net worth indi­vid­u­als seek­ing to evade taxes.”

In its report, MONEYVAL said no European gov­ern­ment effec­tive­ly pun­ish­es lawyers, accoun­tants and oth­er gate­keep­ing pro­fes­sion­als who break the law in facil­i­tat­ing finan­cial crime. The report said only three coun­tries had effec­tive polic­ing mech­a­nisms to deter big banks from mov­ing dirty money.

In 2020, ICIJ along with BuzzFeed News and more than 100 oth­er media part­ners pub­lished the FinCEN Files, an inves­ti­ga­tion reveal­ing the role of world’s biggest banks mov­ing mas­sive flows of dirty mon­ey through the finan­cial sys­tem. The inves­ti­ga­tion found major com­pli­ance laps­es and an atti­tude among banks of treat­ing fines reg­u­la­tors impose on them as a cost of doing busi­ness. As a part of the project, ICIJ exposed major flows of sus­pect mon­ey through HSBC, Deutsche Bank, Danske Bank and oth­er major European finan­cial institutions.

Known for­mal­ly as Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, MONEYVAL is pri­mar­i­ly a research orga­ni­za­tion and lacks legal author­i­ty to force European coun­tries to strength­en their laws or increase enforce­ment bud­gets. The group is an arm of the Council of Europe, found­ed after World War II to pro­mote human rights across the continent.

Although Europe has uni­fied finan­cial reg­u­la­tions that allow mon­ey to flow eas­i­ly across bor­ders, the con­ti­nent lacks any uni­fied anti-mon­ey laun­der­ing author­i­ty. “This com­bi­na­tion fos­ters a vicious cir­cle of ero­sion” around polic­ing dirty Get more information mon­ey, accord­ing to a 2018 paper by researchers Joshua Kirschenbaum and Nicolas Véron. The result of uneven enforce­ment caus­es havens for finan­cial crime to con­tin­u­ous­ly emerge across Europe, which “under­mines the integri­ty of the entire European sys­tem,” the authors wrote.

MONEYVAL’s report found that some coun­tries in the Eurozone his­tor­i­cal­ly regard­ed as tax havens are back­slid­ing while oth­ers are improv­ing. Andorra, a small coun­try between France and Spain, was down­grad­ed this year in the group’s assess­ment of the government’s actions to stop dirty mon­ey. Another noto­ri­ous tax haven, Cyprus, did appear to insti­tute changes last year but too late for MONEYVAL to assess them.

Malta, anoth­er tax haven, made progress last year in imple­ment­ing laws and reg­u­la­tions to pro­tect against mon­ey laun­der­ing, the report said. The Holy See, the juris­dic­tion of Vatican City, also has made sig­nif­i­cant progress fol­low­ing pre­vi­ous crit­i­cal assess­ments of its finan­cial crime controls.

Only a small hand­ful of coun­tries have set up effec­tive data­bas­es to help law enforce­ment iden­ti­fy the own­ers of  anony­mous shell com­pa­nies, which are reg­is­tered in the names of so-called nom­i­nee, or stand-in, offi­cers and directors.

MONEYVAL found that only five coun­tries col­lect own­er­ship data in a way that is effi­cient for law enforce­ment to access. Yet the group said Gibraltar, anoth­er his­toric haven of secre­cy, had tak­en steps to increase the trans­paren­cy of own­er­ship of com­pa­nies reg­is­tered there.

The watchdog’s report comes after a speech out­lin­ing var­i­ous chal­lenges in the fight against dirty mon­ey by the pres­i­dent of the pri­ma­ry glob­al body of gov­ern­ments that sets pol­i­cy stan­dards for stop­ping finan­cial crime.

In the speech late last month, Financial Action Task Force President Marcus Pleyer point­ed to anony­mous shell com­pa­nies and trusts as a major con­tin­u­ing tool for ter­ror­ists and oth­er crim­i­nals, and said that coun­tries around the world are still strug­gling to achieve actu­al results. Countries “actu­al­ly have to be effec­tive in fight­ing mon­ey laun­der­ing and ter­ror­ist financ­ing,” Pleyer said. “Often this means going beyond the min­i­mum require­ments to have a sys­tem in place that is fit for pur­pose, and one that can address the risks we all face.”

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