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Resolution 2130 (2016)
Lessons from the “Panama Papers” to ensure fiscal and social justice
1. The “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 will
no longer tolerate legal systems that 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” have weakened people’s trust
in democratic, financial and tax systems as a whole, posing a threat
to the fundamental values of European society – particularly, fiscal and
social justice.
2. The Parliamentary Assembly is very much concerned about the
scope of tax avoidance, tax evasion, and even tax fraud in modern
societies, which nowadays even involves 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 people’s trust
in democratic structures.
3. 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 fraud.
4. 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.
5. 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 standards. 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;
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
the OECD’s 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 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 ensure
access to financial information at sufficiently early stages of
investigations into criminal proceeds;
5.9. introduce stronger sanctions for banks and legal entities
that assist in tax fraud, including the temporary suspension or
withdrawal of operating licences and the freezing of accounts and
assets;
5.10. make the OECD Base Erosion Profit Shifting (BEPS) Guidelines
on tax challenges and tax standards, which have already been agreed
by OECD countries and the G20, the new global norm;
5.11. encourage the OECD to review, together with the Council
of Europe, 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 draft 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.
6. 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 opinions of compliance departments should be decisive during
any decision-making processes;
6.6. acknowledge the importance of international co-operation
and increase the amount of information that is voluntarily disclosed
to foreign authorities without international co-operation requests.
7. The Assembly acknowledges the need to restore citizens’ trust
in the European democratic system by, among other things, preventing
politically exposed persons from using secrecy jurisdictions, and
therefore calls on member States to:
7.1. ensure that financial institutions and designated non-financial
businesses and professions take particular care to identify politically
exposed persons, their family members and close associates and that
necessary enhanced measures are applied rigorously (including ascertaining
the sources of wealth);
7.2. ensure that such accounts are continuously subject to
enhanced monitoring, and are actively followed up by regulators
on supervisory visits, while applying proportionate dissuasive sanctions
where failures are identified;
7.3. keep transactions involving politically exposed persons
under enhanced surveillance for at least five years following the
end of the duties justifying this status.