EU Lawmakers Want a Financial Police Force to Fight Money Laundering

As reports continue to roll in about money laundering scandals at EU banks, European Parliament lawmakers have said that the bloc needs a dedicated police force to combat the problem.

The proposal is made in a report from the Parliament’s Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance, which has spent a year looking into the banking and finance sectors in the wake of the Panama Papers revelations and the LuxLeaks scandal in Luxembourg – one of seven countries named in the report for allowing individuals and companies to hide their cash.

The committee said the 28 EU countries have not done enough to close loopholes on tax rules, as many governments showed a “lack of political will to tackle tax avoidance and financial crime.” Along with Luxembourg, the committee named Belgium, Cyprus, Hungary, Ireland, Malta and The Netherlands as havens for tax avoidance.

The committee’s proposals will be voted on by the entire European Parliament in late March, but even then will only have advisory status. Despite the emergence of new tax loopholes, such as the “cum/ex” share trade trick revealed last year by a coalition of journalists from twelve European countries, the EU has to date been reluctant to bring in strong measures to deal with the problem.

The report said that some EU countries, benefit from having corporations deposit billions in their banks and “display traits of a tax haven and facilitate aggressive tax planning,” suggesting governments are unlikely to stop these practices in the absence of strong obligations to do so.

“Europe has a serious money-laundering and tax fraud problem,” said Socialist lawmaker Jeppe Kofod, who took part in drafting the report, urging the European Commission to set up the financial policing force.

The non-binding report also suggests the EU should set up a financial oversight body, although there’s been little appetite to do so to date and European Central Bank calls to set up a financial watchdog have been ignored.

Casper von Koskull, CEO of Nordea, the largest bank in the Nordic countries, told the Danish newspaper Borsen that the EU should set up a body to rein in the bloc’s banks to prevent money laundering and vet deposits for possible criminal activities.

“What we are doing is still not enough to fight money laundering effectively,” von Koskull said. He added: “Banks cannot solve this problem alone. We need a supranational authority to ensure that banks’ anti-money laundering efforts are effective and that all banks are on the same level.”