The Caithness Courier, May 2015
While citizens across Europe see public services cut and living standards squeezed, we continue to be overwhelmed by reports of deals, losses, gains and bonuses involving staggering, almost incomprehensible amounts of money. Furthermore, we remain confused and ‘in the dark’ by the use of the complex jargon of the banking world.
One such word is ‘LIBOR’. This stands for the ‘London Inter-bank Offered Rate’ and is considered to be one of the most important interest rates in finance. Currently set in London, it is meant to reflect the average rate that banks pay to lend to each other. It is used to benchmark not just complex financial transactions, but everything from car loans to mortgages to those credit card bills that we all struggle to keep under control.
Last year amongst a barrage of other financial scandals, excessive bonuses, tax evasion and money laundering, readers may remember Barclays being fined £290m after some of its traders were found to have attempted to rig the LIBOR rate. Banks are supposed to submit the actual interest rates they are paying, or would expect to pay, for borrowing from other banks but it was discovered that they were falsely inflating or deflating their rates to profit from trades, or to give the impression of being more creditworthy than they really were.
The LIBOR scandal demonstrated what unregulated benchmarks can lead to and in May’s Strasbourg Plenary Labour MEPs voted for EU action to clamp down on rate-rigging and for regulations to strengthen the accuracy and integrity of benchmarks used in financial instruments. The new rules are designed to improve governance and require greater transparency of how a benchmark is produced.
The Parliament also voted to adopt an ‘Anti-Money Laundering Directive’, designed to strengthen the EU's defences against money laundering and terrorist financing.
For the first time, central registers of beneficial ownership of companies and trusts are to be held by all EU countries. These must be made available to all who can demonstrate a "legitimate interest" in them and allow for governments, if they wish, to go further and make the registers completely public. Authorities should now be able to get to the bottom of deliberately complex corporate structures and see who really owns European companies and trusts.
Not only will this help in the fight against money laundering, but these registers will prove to be a vital tool in the ongoing fight against tax evasion and aggressive tax avoidance.
The vote was considered a huge step forward for Europe, not just for fighting against the twin threats of money laundering and terrorist financing, but also in the ongoing fight for tax justice. Tax fraud and evasion alone is costing member states €1 trillion a year.
Labour MEPs however believe we should go further still and make these registers completely public allowing European citizens to know who owns the companies that operate in their countries. We are calling on national governments to take advantage of the option given in the Directive and make their registers publicly accessible.