Financial flows & crime

Large scale transnational corruption relies on sophisticated techniques to disguise the origins and destinations of illicit financial flows. According to Global Financial Integrity, transnational corruption worldwide is valued at an average of €1.3 trillion to €1.8 trillion annually.

A relatively stable political environment makes the EU an attractive destination for laundering the proceeds of crime. Research suggests that illicit activities in the EU generated about €110 billion in 2010 – or around 1% of the EU’s GDP. Meanwhile, the EU loses up to €1 trillion each year in tax evasion and tax fraud, according to the European Commission. Not only does this constitute a threat to European financial stability, it also diverts money from the public purse, erodes services and undermines trust in institutions.

  • Corporate Accountability
  • Anti-money laundering
  • Open Data

About Corporate Accountability

From bribery, to undue influence and collusion, from fraud to money laundering, corruption in the private sector undermines the vitality of markets, the livelihoods of people and damages society as a whole. From ecological disasters to economic instability and human rights violations, private sector corruption has drastic consequences on our world. It erodes public confidence in institutions and deprives citizens of the benefits of economic growth.

The recent financial crisis is among the most glaring examples of a persistent integrity gap in private sector institutions. Corrupt and unethical behaviour in the financial industry includes not only episodes of fraud, misselling of financial products, market manipulation, conflicts of interest, insider trading and money laundering, but also behaviour that ignores the wider responsibility of banks towards depositors, tax payers and society at large. The most recent scandals demonstrate that regulatory and judicial efforts have not delivered the much-needed systemic and cultural changes required to restore trust.

In the European Union, corporate integrity standards have not yet reached a level that prevents corruption and undue influence, and the EU governance framework for corporate activities does not properly address demand and supply-side corruption.

However, the EU can help combat corruption in the private sector through stricter anti-corruption standards in trade policies, through more transparent and corrupt-free public procurement practices and through more substantial initiatives to promote best practice on corporate compliance or anti-bribery systems or, where necessary, changes to company law.

The EU can also better promote reporting of company anti-bribery programmes, company structures and their financial contribution to the countries where they operate (so called country-by-country reporting). This helps promote integrity standards by allowing citizens to hold them to account for their impact on the ground.

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Corporate Tax Tracker

The Corporate Tax Tracker is an online platform, that allows anyone to compare and analyse banks’ activities and payments in different jurisdictions of operation. The visualisation of the data aims at providing more transparency into the corporate...

Extractive Industries Transparency

Natural resources can bring considerable amounts of wealth to a country. However, an estimated 680 million people in resource-rich countries still live on less than 2 USD per day. For these people, wealth in natural resources has failed to deliver...

Tax Transparency

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Anti-corruption is essential for corporate due diligence

The global pandemic has demonstrated that resilient global supply chains that protect both the people and planet will be crucial to companies and economic recovery in the future. From forced labour, to corruption in environmental protection we see...

About Anti-money laundering

Transparency International EU (TI EU) provides policy analysis and recommendations. We advocate for robust anti-money laundering rules at EU level and better implementation at national level. Our current priorities include:

Anti-money laundering & Beneficial ownership transparency

Since 2013, Transparency International EU has been closely monitoring EU legislative processes related to ‘beneficial ownership transparency’. A beneficial owner is the person who ultimately owns, controls, or benefits from a company.

We successfully advocated for the adoption of public registers of beneficial owners for companies and trusts as part of the new EU legislation enacted in 2018 (thereafter 2018 Directive) and expected to be transposed in national legislations in January 2020. TI EU is currently monitoring effective transposition and implementation by Member States as well as the discussions at EU level around the foreseen revision of EU anti-money laundering rules and the proposal to turn the 2018 Directive into a regulation. Our most recent research on beneficial ownership transparency standards is summarised in our report ‘Under the Shell: Ending Money Laundering in Europe‘, published in April 2017.

EU anti-money laundering

The EU has come a long way in fighting money laundering and now has among the most advanced anti-money laundering rules in the world. In practice, however, the current framework is poorly implemented. Recent money laundering scandals have shown that the EU remains an attractive destination for illicit funds and how indispensable European banks and other intermediaries are in helping – either knowingly or negligently – design and run dodgy schemes.

TI EU is advocating for the EU to get its house in order and tackle money laundering facilitated by European banks and other professionals. In particular, we believe the EU must create the a new EU supervisory body with sufficient resources, governance and power to conduct independent investigations and sanction non-compliant firms or Member States.

Asset recovery

In recent years, scandals involving misappropriation of public funds and money-laundering by foreign politicians, business magnates and their family members have laid bare the role of the EU as an attractive destination for their ill-gotten gains and public money stolen from third countries. This stolen wealth ends up in bank accounts, luxury goods, or high-end property across Europe.

However, despite notorious cases of individuals laundering money in Europe making the headlines, the EU performs poorly when it comes to confiscating and returning these looted assets. It is estimated that within the EU only 2.2% of criminal proceeds are seized, and an even smaller percentage (1.1%) are confiscated. Very little is returned to victim populations.

At TI EU, we focus in particular on the recovery of the proceeds of grand corruption, the massive embezzlement of public funds by high-level officials – such as Teodorin Obiang from Equatorial Guinea, Gulnara Karimova from Uzbekistan. To strengthen EU policy in this area, we advocate for new instruments to facilitate the confiscation of stolen assets, as well as establishing principles for their responsible repatriation as part of the upcoming revision of the 2014 Directive on asset freezing and confiscation.

Golden visas

Following the 2008 financial crisis, new kinds of investor schemes have blossomed across Europe with the aim to offer fast-track residency or even citizenship to third-country nationals in return for investments in the national economy. Although, foreign investment in key economic sectors may be welcome, such programmes also offer an easy route for money launderers wishing to introduce substantial amounts of illicit cash to the market. Another characteristic of these schemes is that they essentially rely on their capacity to offer free access to the Schengen area. As such, the lack of transparency and checks over these schemes risks undermining EU core values and citizenship principles.

Transparency International EU is advocating for the phase out of risky golden visa schemes and in the meantime calls on the EU to adopt common integrity and transparency standards in the management of these schemes.

 

 

 

Related Projects

Asset Recovery

Asset recovery refers to the process by which the proceeds of corruption transferred abroad are recovered and repatriated to the country from which they were taken or to their rightful owners. TI EU advocates for a comprehensive reform of the EU...

Golden Visas

Following the 2008 financial crisis, new kinds of investor schemes, known as golden visas and passports, have blossomed across Europe. Names and modalities differ from one Member State to the other, but objectives are the same: offering fast-track...

Role of Intermediaries in the Fight Against Money Laundering

Recent scandals, such as the Panama Papers, have highlighted systemic weaknesses in AML facilitating abuse of the financial system on a massive scale with severe consequences for societies, businesses and citizens around the world.  Professionals...

Enhancing beneficial ownership transparency

The ‘Panama Papers’ of 2016 were a widely discussed phenomenon. But, what did they actually tell us that we didn’t already know? That the global financial system is plagued by shady practices and secrecy? This is a well-known tale.

Recent News

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The golden visa industry needs regulating now

The recent revelations by the Organised Crime and Corruption Research Project (OCCRP) on the sale of a Cypriot golden passport to Jho Low, a corrupt Malaysian businessman accused of embezzling billions from the Malaysian sovereign wealth fund 1MDB,...

About Open Data

Open data is a key requirement for achieving progress in the fight against corruption. For this to happen, data must be accessible, accurate, intelligible and meaningful. This is one of the reasons that the G20 has opted to adopt open-data principles to help promote public integrity and reduce corruption. This move reflects a growing trend toward the increased publication and availability of open data – data that is freely shareable, comparable, released and usable. The international Open Data Charter and specific national initiatives have attempted to create a common foundation to accelerate this process.

The EU has seen progress, manly driven by the EU Commission, in advancing the publication of information in open data format. This includes the launching of such platform as the EU Open Data Portal and DG Regional Policy’s portal on structural and investment funds. Despites these improvements more robust EU policies and practices need to be in place to maximise the use of open data to fight corruption.

Related Projects

Integrity Pacts

Through transparency and monitoring Integrity Pacts improve trust and accountability in public procurement.

Tax Transparency

What is the problem? In the current international financial system, multinational companies are under no legal obligation to disclose this information regarding their activities, profits and the taxes they pay in each country of operation. Key...

Open Budgets

Openness and transparency can act as a disincentive to corruption in public spending. The current lack of open budget and expenditure data makes it impossible for citizens to get a comprehensive overview on how EU funds are being spent....

Integrity Watch

EU Integrity Watch is a central hub of online tools that allow citizens, journalists and civil society to monitor the integrity of decisions made by politicians in the EU

Recent News

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ECJ rules against MEP expenses transparency

Today, the European Court of Justice (ECJ) has ruled that the European Parliament is not required to provide access to documents on how MEPs spend their various allowances, which was requested by a consortium of investigative journalists from the...
Event

DIGIWHIST Workshop: Big data on public procurement

Conference room, Rue d’Edimbourg 26, 1050 Ixelles, Brussels, 29 January 2018.  Register here or in the form below.  The main goal of the DIGIWHIST is the systematic collection, structuring, analysis, and broad dissemination of information on...