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War in Ukraine requires EU to urgently step up its sanctions implementation transparency, NGO says

The NGO Access Info Europe calls on EU to implement disclosure commitments to safeguard effectiveness of sanctions against Russian oligarchs.

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In the interest of timely publicity for the tabled policy question, the following text comprises a verbatim reproduction of a press statement of the Madrid-based NGO Access Info Europe released on 2 March 2022. Please note that the contents and opinions expressed below represent the views of the authors and are solely attributable to them.

Open Government in the EU Blog expresses its strong condemnation of the aggressive and entirely unjustifiable military invasion of Ukraine by the Putin regime and deplores the vast human suffering that has resulted from it.

Immediate transparency of company ownership is imperative to unveil hidden wealth of Russian oligarchs in the EU

Madrid, 2 March 2022Helen Darbishire and Rachel Hanna of Access Info Europe explain why transparency is essential to ensure the effectiveness of the sanctions against Russia. 

Following the invasion of Ukraine, there has been global outrage at Russia’s blatant disregard for international law, human rights, and the principle of state sovereignty. 

In an attempt to deter Putin from escalating military action in Ukraine, the EU and its allies have come together to decide on sanctions that directly target Russian oligarchs, freezing their assets – often the fruit of corruption and money laundering –  and impeding them from conducting financial transactions in the European Union, the UK, and the United States.

Ukraine meanwhile has, in the past few years, made significant progress in the fight against corruption, being the second country in the world to open its beneficial ownership register, also establishing an open company register, and an open contracting system ProZorro that has become a model globally. 

The people of Ukraine are now fighting to ensure that this democratic progress is not reversed. In the words of EU Commission President Ursula von der Leyen, this is a clash between democracies and autocracies. 

Access Info welcomes the mobilisation of political will to target the wealth of the Russian elite, but we are concerned that without a strong, robust and transparent system of company and beneficial ownership in the EU, only so much can be done. The corrupt Russian kleptocracy has long since learnt how to navigate the EU system, directly benefiting from the weak levels of beneficial and company ownership transparency, concealing their mass wealth by using families and shell companies to move and hide assets.

For all the discussion of combatting money laundering in recent years, EU Member States have been remarkably slow to implement even the rules that they themselves have agreed to. The European Commission currently has legal proceedings open against 21 Member States for not fully transposing and/or implementing the 5th Anti-Money Laundering Directive, with infractions including the failure to establish public beneficial ownership registers by January 2020.

Another major concern is the lack of progress in opening up company registration and ownership as free of charge open data, even though this was promised by the 2019 Open Data Directive. The deadline for Member States to implement the directive has passed, but their hands are tied as the Commission has made next to no progress on the necessary Implementing Act. One excuse for this delay is the cost of transforming and digitalising these registers so that they can be opened. 

These are phoney arguments. The costs of opening up data are minimal compared with the costs of not doing so, the costs of corruption and money laundering, the democratic costs, even the costs in human lives. 

During the first days of this war, the Access Info team has been contacted by journalists and activists trying to access company registers to track where those under the new sanctions might be hiding their wealth. We are not always able to help them as the relevant registers are not fully open, and the beneficial ownership registers have not yet even been created in some countries. 

Now that we have seen what the EU can do when there is determination and political will, it is now time for that political will to be directed towards EU anti-corruption efforts. 

Transparency and accountability of the European financial system must be a priority. Only then can we effectively combat corruption, uphold democracy and strengthen the rule of law.

In order to ensure that EU sanctions really have an effect on the Russian kleptocracy and on their hidden wealth, and on similar regimes around the world who bring their money to Europe, the EU must push for the implementation of anti-corruption tools that will aid the tracing of these assets, including opening company registers and beneficial ownership registers to the public, so that investigative journalists and civil society organisations can do their work and expose illicit financial flows.

We know what needs to be done, and now is the time to do it!

Access Info hereby calls on the European Commission to:

» Comply with its obligations under the Open Data Directive to open up company data by moving rapidly with a proposal for and public consultation on an Implementing Act that delivers full transparency of company ownership information under a genuinely open licence; 

» Support the work of investigative journalists and anti-corruption organisations by ensuring that there is, at the EU level, a central portal providing cost-free access to national company and beneficial ownership registers. 

Access Info calls on EU Member States to: 

» Act urgently to comply with their obligations under the 5th Anti-Money Laundering Directive so that every country has a publicly-accessible beneficial ownership register and, as a further measure to facilitate the work of journalist and civil society, providing cost-free access; 

» Commit to act immediately to open their national company registers as open data with the key data needed for anti-corruption work being available to all, free of charge. 

Helen Darbishire is Executive Director at Access Info Europe.

Rachel Hanna is Legal Researcher at Access Info Europe.