EU Explores The Possibility Of Creating An Asset Super-Registry: Cash In Hand, Jewellery, Art Could Be Included

Intrusion into people's privacy is justified with the need to fight against money laundering and tax fraud.

The European Commission has commissioned a feasibility study to explore the European asset register. Such a super-register would not only include a person's shares in companies and real estate, but also the idea of including everyone's cash in hand, art, precious raw metals, jewellery, in-game assets, crypto-assets, and anything else of value. The rationale behind such ideas is to combat tax evasion and money laundering.

The debate on an EU-wide asset register became more active in 2021 when Europe sought to identify Russian assets. As a result, the European Commission commissioned a feasibility study on whether and how a centralised asset registry could be created and deployed in Europe to fight money laundering, terrorist financing, and tax evasion. The study focused on how member states are already recording the financial circumstances of their citizens and how this data could be collected and linked together centrally, writes Finexity.

The report published this year on the creation of such an asset registry is in any case a very telling document. Examples of the types of assets identified as being linked to money laundering and tax evasion include cash (in the bank and in hand); financial assets (securities, limited liability companies); intangible assets (crypto-assets, NFTs, in-game assets); tangible assets (real estate, vehicles, ships, aircraft, weapons, art, collectors’ items, antiques, jewellery); commodities (precious raw materials) and other assets (safe deposit boxes in banks and non-banks). While some assets, such as real estate, already have registers and records maintained by countries due to property rights, other types of assets require the establishment of new registries, and registration could raise concerns about privacy invasion.

As an example, the study suggests that all cash transactions should be traceable through a cash register. Europeans should report the cash they hold, and the amount in the register should increase or decrease accordingly after each transaction. According to the authors of the study, this would require a new system for reporting cash transactions in real time. However, it is believed that, despite any efforts, it would not be possible to verify whether a person has reported the amount accurately and on time. Therefore, cash control measures are considered rather unlikely to be feasible.

Three Scenarios of the Study

A register of valuable assets, such as art, antiques, collectibles, and jewellery has been deemed complex. At the same time, alternative sources for collecting data on the ownership and value of these assets, such as dealers or intermediaries, were also considered. However, this solution would impose a significant burden on potential respondents, and authorities may face difficulties in verifying the accuracy of the transactions.

Three possible implementation scenarios were assessed: (1) the creation of additional asset registries at the national level and their interconnection at the EU level; (2) the interconnection of existing national asset registries at the EU level; and (3) the establishment of a centralised EU asset registry.

The report commissioned by the European Commission weighs 3 scenarios and plays with the idea of creating new registries for cash in hand, art, precious raw metals, jewellery, in-game assets, crypto-assets, and anything else of value. Photo: screenshot.

The main advantages of the first scenario were found to lie mainly in the high asset coverage. At the same time, it would be costly and resource-consuming to implement it in practice. Problems with data quality and completeness can also be expected.

The second scenario might, according to the study, be implemented more swiftly and less costly to implement as it relies on existing registers. Personal data would be processed in a more limited way and would only cover certain categories of assets (real estate, companies, and trusts, bank account registries, and safe deposit boxes at banks). While this solution would reduce the seriousness of the interference with fundamental rights, the smaller coverage of asset categories would, in the opinion of the study's authors, provide the competent authorities with less extensive information on asset holders. The study considered the third scenario to be the most significant restriction on citizens' data protection and privacy; however, it would also provide the most accurate overview of an individual's assets, making it appropriate and necessary to achieve the objective. It was also noted that the creation of a central register at the European level could be too complex, as supervision would be a task for the EU and would also raise legal questions.

Overall, the study found that the second scenario, i.e. the interconnection of existing national asset registries at the EU level, is the most realistic and simplest to implement. This would largely build on already existing and partially merged registers. There would be few legal obstacles as the data would remain in the member states and would not be stored centrally.

The Commission claims that there are no plans to create a register

While some sources assert that an agreement has now been reached to establish such a central asset register, others refute this, stating that the European Commission currently has no plans to move forward with it. The study was necessary only to understand what assets member states are registering.

At the same time, the brief description of the study's procurement already mentions the possibility of considering the study's results in future steps: "This project shall look into various possibilities for collecting information to set up an asset registry which may afterwards feed into a future policy initiative. It shall aim at exploring how to collect and link information available from various sources on asset ownership."

Supporters of the asset register argue that the system is necessary to effectively combat financial crimes, tax evasion, and corruption. It would help track the origins of assets, increase transparency, ensure proper taxation of assets, and make tax evasion more difficult. Standards and procedures would also strengthen cooperation among EU member states, facilitating cross-border investigations, for example.

However, critics have pointed out that the EU asset register raises concerns about data protection and citizens' privacy. If the register is linked to monitoring and sanctioning measures, it could extend beyond the fight against money laundering and terrorism financing. There are also fears of even more extensive state control, with speculation that the register could pave the way for new taxes.