Anti-money laundering

The EU relatively stable political and institutional environment makes it an attractive destination for laundering the proceeds of criminal activities. The High Level Panel on Illicit Financial Flows from Africa notes that a large share of illicit financial flows from Africa has a tendency to end up in bank accounts in developed countries. In particular, it estimates that 22.5% of the illicit money emanating from Nigeria’s oil sector flows in Spain, while 11.7% of illicit financial flows from Algerian oil and 23.6% of illicit financial flows from Cote d’Ivoire’s cocoa sector end up respectively in Italy and Germany.

Huge amounts of illicit flows are also leaving the EU. According to the European Commission, up to 1 trillion EUR could be lost every year by the EU due to tax fraud and evasion.

Not only does this constitute a serious threat to the EU financial stability and security, but also by diverting money from the public purse, it contributes to distorting public policy, eroding the role of the state as a public service provider and undermining citizens´ rights and trust in their institutions.

Efficient anti-money laundering rules are key to preventing, detecting and stopping illicit financial inflows to and outflows from the EU. The 4th Anti-Money Laundering Directive adopted in 2015 currently under revision is a first step towards introducing greater transparency in the EU financial system. Yet, it is not enough as revealed by the outbreak of the Panama Papers scandal in April 2016. Most urgently, the EU needs greater transparency over the ultimate owners of shell companies and trusts and proper enforcement of existing AML rules.