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Fighting Tax Crimes – Cooperation Between Financial Intelligence Units

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Fighting Tax Crimes – Cooperation Between Financial Intelligence Units Fighting tax crimes – Cooperation between Financial Intelligence Units Ex-Post Impact Assessment Fighting tax crimes - Cooperation between Financial Intelligence Units Fighting tax crimes: ex-post evaluation of the cooperation between Financial Intelligence Units Study In the wake of the ‘Panama Papers’ leaks, the European Parliament decided to establish a Committee of inquiry to investigate alleged contraventions and maladministration in the application of Union law in relation to money laundering, tax avoidance and tax evasion (the PANA committee), on 8 June 2016. The DG EPRS Ex-post Assessment Unit (IMPT) was requested, by a PANA Coordinators’ decision of 12 October 2016, to provide a study on: Fighting tax crime: ex-post evaluation of the cooperation between Financial Intelligence Units (FIUs) at the European and international level. The study is divided in two parts: (1) an opening analysis prepared in-house by the DG EPRS Ex-post Assessment Unit (IMPT) that covers EU FIUs and the EU legal framework, and (2) an outsourced comparative analysis that focuses on FIUs in Canada, France, Switzerland and the UK. Abstract Since the mid-1990s, the development of anti-money laundering (AML) strategies at the international level has led to the establishment of Financial Intelligence Units (FIUs) at national level. FIUs serve as national centres for the receipt and analysis of suspicious transaction reports (STRs). They collect and analyse data that help to establish links between suspicious financial transactions and illegal activities. FIUs are thus important players in the prevention of money laundering. Furthermore, given the strong cross- border dimensions of money laundering, the exchange of information across FIUs is key to ensure illicit flows of money are properly detected and subsequently investigated by law enforcement authorities. This study intends to provide a better understanding of the current state of play in relation to the role, powers and activities of FIUs in fighting financial crime in general and tax crimes in particular, both at European and international level. PE 598.603 1 Ex-Post Impact Assessment AUTHOR of the opening analysis: Dr Amandine Scherrer, Ex-Post Impact Assessment Unit AUTHORS of the comparative analysis: Dr Anthony Amicelle (International Centre for Comparative Criminology, Université de Montréal, Quebec, Canada), with Julien Berg (École de Criminologie, Université de Montréal) and Killian Chaudieu (École des sciences criminelles, Université de Lausanne, Switzerland) The comparative analysis was written at the request of the Ex-Post Impact Assessment Unit of the Directorate for Impact Assessment and European Added Value, within the Directorate-General for Parliamentary Research Services (DG EPRS) of the European Parliament. ACKNOWLEDGMENTS The authors would like to thank officials of the European Commission and participants of the EU FIU Platform, as well as the stakeholders interviewed for this assessment for their useful input. RESPONSIBLE ADMINISTRATOR Amandine Scherrer, Ex-Post Impact Assessment Unit To contact the Unit, please e-mail [email protected] ABOUT THE PUBLISHER This paper has been compiled by the Ex-Post Impact Assessment Unit of the Directorate for Impact Assessment and European Added Value, within the Directorate–General for Parliamentary Research Services of the Secretariat of the European Parliament. To contact the Unit, please email [email protected] LANGUAGE VERSIONS Original: EN This document is available on the internet at: www.europarl.europa.eu/thinktank DISCLAIMER AND COPYRIGHT This document is prepared for, and addressed to, the Members and staff of the European Parliament as background material to assist them in their parliamentary work. The content of the document is the sole responsibility of its author(s) and any opinions expressed herein should not be taken to represent an official position of the Parliament. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the European Parliament is given prior notice and sent a copy. Manuscripts completed in March 2017. Brussels © European Union, 2017 PE 598.603 ISBN 978-92-846-0701-3 doi:10.2861/2427 QA-02-17-248-EN-N PE 598.603 2 Fighting tax crimes - Cooperation between Financial Intelligence Units Table of Contents List of abbreviations and acronyms ............................................................................................... 4 List of tables and charts .................................................................................................................... 5 Methodology ..................................................................................................................................... 6 Part I: EU FIUs and the applicable EU legal framework .......................................................... 7 Key Findings ...................................................................................................................................... 7 1. FIUs in the context of international standards and EU requirements .................................. 8 1.1. The establishment of FIUs in the anti-money laundering landscape ................................ 8 1.2. Limits and opportunities of assessing the cooperation of FIUs........................................ 10 2. FIUs’ structures, resources and channels of cooperation ...................................................... 13 2.1. Different structures .................................................................................................................. 13 2.2. Resources .................................................................................................................................. 14 2.3. Suspicious transaction reports: various sources and varying quality ............................. 16 2.4. Channels of cooperation ......................................................................................................... 18 2.5. FIU-to-FIU cooperation and exchange of information ....................................................... 19 3. Main challenges of FIUs’ actions in fighting tax crimes ........................................................ 20 3.1. At national level: cooperation between FIUs and tax authorities ..................................... 21 3.2. Access to information on beneficial ownership ................................................................... 22 3.3. Tax-related cases as an obstacle for European and international cooperation ................ 24 3.4. Assessing the change of professional cultures ..................................................................... 26 Part II: Comparative analysis of Financial Intelligence Units (FIUs) in Canada, France, Switzerland and United Kingdom .................................................................. 27 Executive summary ........................................................................................................................ 28 Introduction ..................................................................................................................................... 31 1. National financial intelligence units in practice ..................................................................... 33 1.1. Financial intelligence: the evolution of priorities ................................................................ 33 The (re)definition of dirty money ................................................................................................. 34 The (re)definition of FIU identity ................................................................................................. 37 1.2. Questioning reporting practices ............................................................................................ 44 Reporting suspicious transactions ................................................................................................ 45 Typology of suspicious transaction reports ................................................................................ 48 1.3. Financial intelligence in Numbers ......................................................................................... 49 2. Transnational financial intelligence in practice ...................................................................... 62 2.1. European and international communication channels ....................................................... 62 The Egmont Secure Web ................................................................................................................ 63 FIU.NET ......................................................................................................................................... 66 Other recognised cooperation channels ....................................................................................... 70 2.2. Financial intelligence cooperation in face of obstacles ....................................................... 70 (Lack of) capacity to respond to FIU requests............................................................................. 71 (Lack of) spontaneous dissemination and ‘abusive’ restriction ............................................... 74 2.3. Information sharing in numbers ............................................................................................ 75 Conclusion ....................................................................................................................................... 79 References
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