Report Exposes One Percent Clear-Up of $70bn Money Laundering in Europe

Report Exposes One Percent Clear-Up of $70bn Money Laundering in Europe © Flickr/ Images Money

16:03 20.05.2015Get short URL

Nearly $70 billion flowed illegally into or out of emerging EU economies in 2011, while the detection rate for illicit funds by law enforcement agencies are estimated to be as low as 1 percent, according to research by Global Financial Integrity.

The shocking statistics come amid calls for the EU and European governments to crack down on anonymous ‘shell companies’ that allow criminals to hide behind the façade of what appears to be a legitimate outfit.

According to the new data released by Transparency International (TI), only one in four EU citizens believe their government is effective in preventing dirty money being spent in their country and four out of five EU citizens are in favour of companies being required to reveal who the real owners are.

Nienke Palstra, Senior EU Policy Officer for TI told Sputnik on Wednesday:

“Companies, trusts and other corporate vehicles can be abused. For a long time, there was no record anywhere of who was behind new companies, and so you got this phenomenon of the shell companies. Ownership structures cross different jurisdictions, involving different types of legal instruments.

“All of this serves to complicate and obscure the true owner and unfortunately, this is something that has been growing.”

Enormous Challenges

She told Sputnik the poor clear-up rate of just one percent of $70 billion is shocking.

“That’s what is incredibly worrying. It’s clear that law enforcement authorities who are meant track down these [money] flows face enormous challenges. Of the cases they are able to detect, they are to seize a tiny percentage of those corrupt funds.”

On Wednesday, members of the European Parliament adopted new rules to help fight money laundering and terrorist financing in the EU. Věra Jourová, the EU’s Commissioner for Justice, Consumers and Gender Equality, welcomed the vote, saying: “Serious and organised crime is driven by profit — tracing the illicit proceeds of crime back to the criminal networks is essential both to detect, prosecute and dismantle those networks and to seize and confiscate their criminal wealth.

“The new anti-money laundering rules adopted today will help us follow the money and crack down on money laundering and terrorist financing.”

However, TI says the new framework potentially leaves open significant money laundering loopholes, especially with regard to trusts. Information on trusts will not be made publicly available and the types of trusts covered will be limited in scope.

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