Global Policy Forum

By Emile Picy

European Union parliaments agreed on Friday to crack down harder on money laundering, proposing to set minimum transparency levels and slap sanctions on countries that do not comply. Dirty money was a direct threat to democracy and the global economy, the EU parliaments said in a declaration adopted at a conference on combating money laundering.

The issue of banking secrecy in some EU states has generated political friction within the bloc as the United States leads an international push for tighter controls to fight "dirty money" following the September 11 attacks on Washington and New York.

The conference in Paris proposed a four-pronged plan to fight money laundering, citing the transparency of capital flows and the introduction of sanctions against non-cooperative countries. European police and legal systems would tighten cooperation and countries would look at how to make the risk policies of banks more efficient, the declaration said.

"Without global and coordinated action, the authorities charged with preventing money laundering will not be able to effectively fight those who are guilty," the introduction of the declaration said.

Countries would work to harmonise rules on professional secrecy codes in the financial sector, create a central register of bank accounts and make Internet service providers tell police who was behind suspect financial transactions. They would restrict, ban or slap surcharges on transactions with individuals or organisations based in countries identified by the Paris-based Financial Action Task Force (FATF) as non-cooperative.

The non-binding declaration also recommended the swift application of a pan-European arrest warrant, used for the first time this month.

EU states, as well as seven candidate countries and Russia's lower house of parliament, sent representatives to approve the declaration.

Last month, a French parliamentary report said Luxembourg and its banking secrecy code were a major obstacle to EU efforts to fight the financing of crime. Luxembourg rejected the report's findings, defending its banking secrecy laws and noting it had been praised by the United States for its help in tracking dirty money since September 11. France's Prime Minister Lionel Jospin, speaking at the conference, said opaque financial institutions could also lead to debacles like the collapse of U.S. energy trading giant Enron Corp.

"Trusts, anonymous foundations, companies for non-residents, whatever their exact legal characteristics and the names in different countries that accept them, these entities have no other goal than to prevent the identification of their economic beneficiaries," he said.

"They are equally...conducive to accounting manipulation, as one could see in the case of the Enron debacle," he added.

He said Europe must speak with one voice on the issue of money laundering and urged faster progress to reach an EU norm on a minimum level of transparency.

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