The draft law would also require banks, auditors, lawyers, real estate agents and casinos, among others, to be more vigilant about suspicious transactions made by their clients, according to EU officials.
The aim, they said, was to make dodgy financial deals harder to hide, and tax evasion more difficult to get away with.
Judith Sargentini, a Green Dutch MEP who has been one of two MEPs to have headed up the European Parliament's response to a 2012 European Commission proposal that introduced the public registers scheme, said the establishment of public registers would "make life more difficult for criminals trying to hide their money".
But some experts involved in the trusts industry said the new register could be a concern for people who are uncomfortable with the details of their wealth being available for public consumption. Currently, trusts afford their users annonymity.
Filippo Noseda, a partner at the Withers law firm and a joint head of its wealth planning department, said that although it was too soon to know the extent to which privacy concerns will be taken into account by local legislation in the various EU countries, "it is fair to say that individuals, wealthy or not, are going to take into account any privacy issues before establishing wealth holding structures [in Europe] in the future.”
“Confidentiality and privacy is clearly high on the agenda here,” he said. “British MEPs have tried to make the point, [but] only time will tell how privacy concerns will be taken into account by local legislation [in the various EU countries]".
As currently proposed, the anti-money laundering directive (AMLD) calls for the establishment of a public central register in all 28 EU countries. Each national register would list information about the ultimate beneficial owners of all sorts of legal arrangements, including companies, foundations, holdings and trusts.
Members of the public wishing to consult the database would be required to register online. Some critics have called for a more demanding test, to filter out those who could be seeking access to the information for improper reasons.
Gerry Brown, technical manager at Prudential and a long-time observer of the international tax scene, said that while the aims of the European Parliament were highly laudable, by itself, it was "difficult to see" how the proposed pan-Europe register would have a significant impact on tax evasion, "unless this action is replicated internationally".
"The vast majority of users of these 'legal arrangements' are law abiding, and for these individuals, the proposals raise privacy, and possibly security, issues,” he added.
Cayman mulls beneficial owners registry
Controversial though it may be in many quarters, the idea of creating central databases which list the owners of companies and other entities has been catching on lately, as part of a global move towards greater transparency and regulation. As reported here earlier this month, the government of the Cayman Islands recently put out for consultation a proposal to implement a public registry of beneficial owners there.
The consultation had been drawn up in the wake of UK prime minister David Cameron’s insistence, last year, that 10 of Britain’s overseas territories and crown dependencies begin to make so-called beneficial ownership information about the companies in their borders more readily available “to law enforcement [agencies] and tax collectors”.
Beneficial ownership is generally defined as the full and accurate details of who really owns and controls a company, which in many cases is not publicly stated.
