SAU, Alm.del - 2016-17 - Bilag 22: Europarådets Parlamentariske Forsamling Resolution 2130 (2016): Lessons from the "Panama Papers" to ensure fiscal and social justice

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SAU Alm.del Bilag 22
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Resolution 2130 (2016)

Provisional version

Lessons from the “Panama Papers” to ensure fiscal and social

justice

Parliamentary Assembly

The so-called “Panama Papers” scandal exposed how shadow companies and secret accounts are

used by many to hide taxable income and assets in tax havens. The revelations intensified public outrage

which had been simmering for years: citizens no longer wish to tolerate legal systems which allow taxation to

be easily avoided by major companies and very rich people as well as ill-gotten gains to be stashed away,

while they pay taxes on stagnant or even falling incomes. The “Panama Papers” led to a fall in people’s trust

in democratic, financial and tax systems as a whole, posing a threat to the fundamental values of European

society – including fiscal and social justice.

The Parliamentary Assembly is very much concerned about the scope of tax avoidance, tax evasion,

and even tax fraud in modern societies, now even demonstrably involving well-known companies and public

personalities, who should be role models of ethical behaviour. The Assembly considers that a higher standard

of ethics in politics and in the business world is essential to uphold our economic, social and democratic

systems. The Assembly calls for measures to ensure transparency in the business activities of politicians,

since opaque relationships between business and politics undermine the people’s trust in democratic

structures.

The right of access to information is a fundamental right applying to data held by government bodies

and in certain circumstances by private bodies, as guaranteed by the Universal Declaration of Human Rights,

and the European Convention on Human Rights (ETS No. 5). In this regard, the Assembly urges the

investigators to make available all data, referred to as the “Panama Papers”, with a view to allowing the

national law- enforcement bodies to launch their own national investigations and bring to justice those

involved in illegal activities, including corruption and tax evasion.

The Assembly stresses the importance of “whistle-blowers”. Their protection is of paramount

importance for reinforcing the fight against corruption. The Assembly recalls its

Resolution 1729 (2010)

and

Resolution 2060 (2015)

on the protection of “whistle-blowers”, and urges all Council of Europe member States

to properly protect individuals who report any wrongdoing to the benefit of our societies.

The Assembly considers that the fight against tax fraud, tax evasion and tax avoidance requires new

legal or technical standards; what is urgent, however, is the effective implementation of the existing ones. The

Assembly, thus, recommends that the member States:

5.1. ensure an effective follow-up to its

Resolution 1881 (2012)

on promoting an appropriate policy

on tax havens;

Assembly debate

on 11 October 2016 (31st Sitting) (see

Doc. 14141

and

Addendum,

report of the Committee on

Social Affairs, Health and Sustainable Development, rapporteur: Mr Stefan Schennach; and

Doc. 14165,

opinion of the

Committee on Political Affairs and Democracy, rapporteur: Mr Dirk Van der Maelen; opinion of the Committee on Legal

Affairs and Human Rights, rapporteur: Mr Mart van de Ven).

Text adopted by the Assembly

on 11 October 2016

(31st Sitting).

F - 67075 Strasbourg Cedex

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Tel: +33 3 88 41 2000

Fax: +33 3 88 41 2733

SAU, Alm.del - 2016-17 - Bilag 22: Europarådets Parlamentariske Forsamling Resolution 2130 (2016): Lessons from the "Panama Papers" to ensure fiscal and social justice

Resolution 2130 (2016)

5.2. join the Global Forum on Transparency and Exchange of Information for Tax Purposes of the

Organisation for Economic Co-operation and Development (OECD), if they have not yet done so, and

implement Automatic Exchange of Financial Account Information in Tax Matters on a multilateral basis

and via multilateral instead of bilateral agreements;

5.3. provide sound, transparent, stable and fair national tax systems, limiting “red-tape” bureaucracy

and fighting corruption to encourage companies and individuals to keep their assets in their country of

residence;

5.4. increase transparency by setting up a publicly accessible central register of ultimate beneficial

owners of all companies, foundations and trusts, requiring changes to the beneficial ownership

structure to be reflected in this register within a reasonable period of time, subject to dissuasive

penalties for non-compliance;

5.5. maintain close co-operation with the International Monetary Fund, the OECD, the United Nations

and the European Commission on improving the existing tax models and addressing emerging

challenges;

5.6. commit more resources to financial investigation at national level and strengthen the training in

modern financial investigative techniques of relevant police officers, prosecutors and judges;

5.7. increase the international exchange of information and good practices on financial investigative

techniques;

5.8. consider the need for legislative amendments to harmonise access to financial information at

sufficiently early stages of investigations into criminal proceeds;

5.9. develop stronger sanctions for banks and legal entities that assist in tax fraud, including the

temporary suspension or withdrawal of operating licences as well as the freezing of accounts and

assets;

5.10. make the OECD Base Erosion Profit Shifting (BEPS) Guidelines on tax challenges and tax

standards, that have already been agreed by OECD countries and the G20, the new global norm;

5.11. encourage the OECD, together with the Council of Europe, to review their joint Convention on

Mutual Administrative Assistance in Tax Matters (ETS No. 127) with the aim of facilitating the creation

of an international tax co-ordinating body under the auspices of the OECD, capable of imposing

sanctions;

5.12. also develop new international rules jointly with the OECD to enable the direct taxation of the

income and assets of tax haven companies, thus bypassing the individuals and companies that set

them up and overruling existing legal impediments to such direct taxation, either by a new convention or

in the framework of the revision of the existing Convention on Mutual Administrative Assistance in Tax

Matters;

5.13. sign and ratify the Convention on Mutual Administrative Assistance in Tax Matters and its 2010

Amending Protocol (CETS No. 208) if they have not yet done so.

With a view to effectively combating money laundering, the Assembly recommends that member

States:

6.1. ratify, if they have not yet done so, and ensure an effective implementation of the Council of

Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and

on the Financing of Terrorism (CETS No. 198, “Warsaw Convention”);

6.2. ensure effective implementation and technical compliance with the existing anti-money

laundering standards, such as the Recommendations adopted in 2012 by the Financial Action Task

Force and Directive (EU) 2015/849 (the 4th European Directive) in the legal, law-enforcement and

financial sectors;

6.3. pursue rigorously the process of anti-money laundering risk assessment and bring concerns

about possible shortcomings to the attention of the relevant authorities;

6.4. ensure the existence of effective and independent national Financial Intelligence Units (FIUs),

which are free of any political interference in their operational decision-making;

6.5. ensure that banks and other financial institutions apply the highest level of enhanced due

diligence with regard to complex international business cases and potentially high-risk customers; the

opinion of the Compliance Department should be decisive during the decision-making process;

SAU, Alm.del - 2016-17 - Bilag 22: Europarådets Parlamentariske Forsamling Resolution 2130 (2016): Lessons from the "Panama Papers" to ensure fiscal and social justice

Resolution 2130 (2016)

6.6. acknowledge the importance of international co-operation and increase the amount of

information that is spontaneously disclosed to foreign authorities without international co-operation

requests.

The Assembly acknowledges the need to restore citizens’ trust in the European democratic system,

inter alia

by preventing Politically Exposed Persons from using secrecy jurisdictions, and therefore calls on

member States to:

7.1. ensure that financial institutions and the Designated Non-Financial Business Professions take

particular care to identify Politically Exposed Persons, their family members and close associates and

that necessary enhanced measures are applied rigorously (including ascertainment of the sources of

wealth);

7.2. ensure that such accounts are continuously subject to enhanced monitoring, and are actively

followed up by regulators in supervisory visits, while applying proportionate dissuasive sanctions where

failures are identified;

7.3. maintain Politically Exposed Persons transactions under enhanced surveillance for at least

five years following the end of the duties justifying this status.