We need to investigate intermediaries of the offshore industry and push for more transparency

On Monday 26 September in Brussels, we had the first important meeting of the European Parliament’s inquiry committee set up to investigate the Panama Papers (also known as PANA). The committee kicked off by holding a hearing with some of the investigative journalists who were part of the ‘The International Consortium of Investigative Journalists’ (ICIJ) and helped to make these worldwide tax evasion and money laundering systems public.

It was very important for us, members of the committee, to hear the journalists first because they are the ones with access to the leaked documents and the responsibility to make this information accessible to citizens, taxpayers and law makers.

Journalists invited to speak

Gerard Ryle, Director at the ICIJ,

Marina Walker, Deputy Director at the ICIJ,

Bastian Obermayer, Süddeutsche Zeitung [based in Washington DC],

Frederik Obermaier, Süddeutsche Zeitung,

Kristof Clerix, Knack magazine, Belgium,

Oliver Zihlmann, Sonntagszeitung | Le Matin Dimanche, Switzerland,

Julia Stein, Norddeutscher Rundfunk/ NDR, Germany,

Jan Strozyk, Norddeutscher Rundfunk/ NDR, Germany,

Minna Knus, MOT, Finnish Broadcasting Company, Finland,

Their findings are impressive. They told us that they have, together with hundreds of their colleagues, taken on more than 11.5 million leaked financial and legal records from the Panama-based firm Mossack Fonseca. They found information on over 200,000 offshore companies with connections to 140 public officials, including the now former Prime Minister of Iceland, Sigmundur Davíð Gunnlaugsson.

During the exchange with us, they raised several important points. Amongst other things, they stressed the need for the committee to investigate the work of the intermediaries of the offshore industry: bankers, lawyers and wealth managers, to mention a few.

Both in Europe and abroad, these actors seem to exist in a limbo of legality. They exploit loopholes and move funds across multiple national jurisdictions to make sure that their own practices and the assets of their clients are left unscrutinised by tax authorities and law enforcement.

This is exactly where our current systems have failed and where we in the S&D are pushing for action. To mention a few things:

· We need better anti-money laundering laws that close existing loopholes,

· We need more transparency and global exchange of information on who owns what,

· We need to tackle the problems of enforcement of the standards in the legislation.

What’s more, it also became clear that with globalised capital flows our tax administrations aren’t cooperating and sharing information enough, and that our intelligence units struggle to keep track and investigate all the suspicious transaction reports which they encounter.

In the EU, great strides have been made over the past few years to improve the situation but we in the S&D are pushing for more here as well — almost can never be accepted as enough! We will make sure the committee will hear from tax professionals to get an overview of the constraints to their work and come up with initiatives to tackle them.

One thing that we already know would help is the establishment of an EU corporate register of all beneficial owners of corporate entities located here. The S&D Group has long said that this information needs to be publicly accessible and interconnected. This way, scrutiny is widened and information can be verified!

We will also look at ways to make our public registers as broad as possible and even encompass legal entities established outside the EU. A united EU can, in this way, set the global standard by creating a system of financial and trade sanctions for non-cooperative states.

As a finishing note, one thing that became clear when hearing these journalists speak is that this inquiry isn’t just about the firm Mossack Fonseca and its customers. It is about a long established industry of financial criminality, which has bloomed with the active and passive complicity of governments from all around the world, including in the EU. We as S&D members of the inquiry committee will keep up the pressure to end this passivity, just as the invited journalists asked us to do.

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