Presentation Transcript

1. Mutual Legal Assistance Treaties in the EU Challenges from the examples of Money Laundering and Tax Evasion Kevin Jestin Ph. D. Candidate in International Tax Law, Aix Marseille III University
2. Introduction: Key concepts and issues 1- Type of Offences : Money Laundering Tax avoidance -Tax evasion 2- Issue : Mutual Legal Assistance (MLA) Dual criminality principle 3- Geographical scope : EU but also on a larger scale Ex:Offshore financial center connected to EU countries
3. Part 1- Differentforms of Cooperation 1-1- Unilateral : Letters rogatory 1-2- Multilateral :Multilateral treaties and Conventions 1-3- Bilateral : MLA
4. 1-1 Unilateral: ex Letters Rogatory Originally developed to enable cooperation between judges but letters rogatory may also be issued on behalf of the police or prosecutors. Many problems : Each country has its own legislation and practices for the execution of letters rogatory = The execution of letters rogatory constitute a lengthy, cumbersome and uncertain process
5. 2-2 Multilateral cooperation Criminal : Growing number of multilateral treaties ! The European Convention on Mutual Assistance in Criminal Matters 59 and Additional Protocol of 17th March 1978 (extended to tax matter) and 2001 The 1988 Convention against Transnational Organised Crime (UNTOC) The 1978 European Convention on the Obtaining Abroad of Evidence in Administrative Matters The 1957 European Convention on Extradition EU AML Directive (1,2 and 3) …. Tax :A new stress on Multilateral Instruments ? REGIONAL : YES Directive of 19 December 1977 and its amendments, The Benelux, The Nordic Convention, The Saving Directive : modernisation GLOBALLY: NOT YET Ex : The Convention on Mutual Administrative Assistance in TaxMatters …
6. Avantages and Problems Avantages: - Contain binding rules that oblige signatories to provide MLA in connection with the offences covered by the various instruments - Useful in encouraging states to harmonize their criminal legislation and penalize specific conduct (Ex Third EU AML Directive effort to harmonize ML Definition) Pbm These treaties do not seem to be used very often especially in tax cooperation
7. 1-3- Bilateral : MLA Criminal In money laundering matters, they may contain specific provisions that facilitate complex investigations and entitle the requesting state to receive assistance in acquiring bank records and other financial information. Tax Exchange of information generally springs from :  - Double tax conventions (DTCs) or -Tax information exchange agreements (TIEAs). - Less usually, Tax information may be provided under Mutal Legal Assistance Treaties – -or through exchange under anti-M Laudering laws which include tax evasion as a predicate offence.
8. Advantages and Problems Advantages - Unambiguous and binding obligation. - Speed up the MLA process - Are quicker and easier to negotiate and amend. - Can be formulated in a flexible way and can overcome the dual criminality principle But: - It would take years to negotiate bilateral treaties with all the countries of the world. = Targeted bilateral agreement
9. Part 2 - Obstacles to Effective MLA 2-1- Political difficulties: Political commitment 2-2 Practical difficulties: Complexity of offences and offshore confidentiality 2-3- Legal difficulties: Legal principles restricting MLA
10. 1-Political difficulties: Criminal Ex : Issue of national interest and security Tax Sharing information is not necessarily in a country’s own best interests : Low tax countries make themselves less attractive to foreign investors !
11. 2- Practical difficulties: The capacity of the judicial system is further challenged by the level of sophistication of offences. How to make effective use of information that is or could be received ? Offshore confidentiality: Is therea softening attitude through Mutual legal Assistance Treaties?
12. 3- Legal difficulties: In practice, there are varying principles that provide grounds for refusal and make it difficult to obtain speedy assistance ex: - the principle of reciprocity - appeal against the sharing of evidence with the requesting country - some States require dual criminality
13. The Double criminality requirement issue ML Legislation on money laundering also remains deficient in many countries and differs across countries, which further challenges the provision of MLA. Specifics progress in the EU : Anti-ML directives Tax  Dual criminality principle that restricts information exchange on request for the application or enforcement of the domestic tax law of the requesting country to criminal tax matters. Three countries continue to apply the principle of dual incrimination to all of their information exchange relationships - OCDE 2008: Andorra, Cook Island, Samoa - OCDE 2007: Andorra, Cook Island, Samoa
14. Double criminality solutions : The starting point of the double criminality requirement was and is reciprocity as a result of a strict sovereignty thinking. This starting point is based on a concept of strict sovereignty of the 19th century. = This is no longer valid in a Europe growing together. Consequences: - Long term perspective : should be abolished as a whole. - Mid or short term perspective : intermediary solution shall be explored: which way to go?
15. 1- Harmonization : HARD LAW : International and Regional effort to harmonize SOFT LAW : Some examples : Criminal Law Ex :Financial Action Task Force’s 40 recommendations against money laundering Recommendation 1 : Countries should criminalise ML on the basis of … Recommendation 37 : Countries should … render MLA notwhithstanding the absence of dual criminality… Tax Law: Ex : The OECD developed a common understanding of tax fraud which was agreed by all OECD countries except : Luxembourg and Switzerland
16. 2- From double criminality to double prohibition ? A solution could be to reduce double criminality to the concept of double prohibition: The behavior has to be prohibited in both state but it is not necessary that it is a crime in the requested state
17. Conclusion:How can Mutual Legal Assistance be improved? Some questions : Do we have a problem of interaction between cooperation instruments ? A important need to link ML and Tax cooperation in MLA ? Are coercitive actions necessary ?