Companies and trusts will have to list their ultimate beneficial owners in public registers, under tighter anti-money laundering (AML) regulations approved by European Parliament this week.

Banks, auditors, lawyers, and real estate agents also must monitor their clients better to watch for suspicious transactions, under the AML directive approved by parliament. The goal behind the public registers, which would be housed in each member state of the European Union, is to make it more difficult for illicit proceeds to be hidden as well as to clamp down on tax evasion. Annual amounts of money laundered equates to roughly 2 percent to 5 percent of global GDP, EU officials said.

“The public registers will make life more difficult for criminals trying to hide their money. Our economy currently loses huge amounts to tax evasion,” MEP Judith Sargentini of the Netherlands, the lead lawmaker on the legislation for the Civil Liberties Committee, said in a statement.

Under the directive, companies, foundations, holdings, trusts, and other legal arrangements will be required to list the information regarding their true beneficial owners in a public register. All of the member states' public registers will be interconnected throughout the EU. MEPs said individuals would be allowed to access the information after “prior identification” through a simple online registration process. To address privacy concerns of companies subject to the directive, the amended proposal requires a minimum of necessary information to be included in the register with provisions in place to protect data privacy, MEPs said.

The rules regarding politically-exposed persons will be extended to domestic politically-exposed persons, including heads of state, government officials, supreme court judges, and members of parliament. When a company or other entity has a “high-risk business relationship” with a politically-exposed person, additional due diligence will be required to determine the source of funds involved in the deal, according to the legislation.

On the vigilance front, casinos also will be required to be more vigilant about customer transactions, along with banks, auditors, and others. Member states have the option of excluding other gambling services deemed to be lower risk from the requirements. Parliament also passed the Transfer of Funds Regulation, which proponents say will improve the transparency of payers, payees, and their assets.

Similar to the version of tighter AML rules approved by the European Commission last month, the directive calls for a risk-based approach to address the problem with greater efforts required for higher risk sectors and activities. The commission's version also cut in half the threshold to trigger an AML investigation of cash payments, from €15,000 to €7,500. The commission also included other gambling services in its version of the regulations beyond just casinos.

The draft legislation was approved by parliament in a vote of 643 to 30 with 12 abstentions, according to European Parliament's press service. The issue will be taken up again after the new parliament is elected in May, and MEPs will negotiate with the European Council and European Commission on a final version of the law.

In related news this week, European Parliament also adopted the Pericles 2020 program, which will boost efforts to fight counterfeiting of the euro. The €1M annual program provides training and other assistance to guard against euro counterfeiting and related fraud.

“The Euro is one of the EU's most valuable assets,” Algirdas Semeta, commissioner for anti-fraud initiatives, said in a statement. “So we must do all we can to protect it from criminal abuse. We also have to protect honest businesses and citizens from ending up with fake money in their pockets. Pericles 2020 will ensure that the authorities responsible for preventing, detecting, and clamping down on euro counterfeiting are supported and well-informed, and can work together in an environment of mutual trust and information exchange.”

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