Secretly owned companies, where the identity of the real owners – the ‘beneficial owners’ – are unknown, are the favoured getaway vehicles of the corrupt. According to World Bank research
[1], these companies are used 70% of the time to launder the proceeds of grand corruption. These companies also enable fraud, tax evasion, organised crime and terrorist financing, at great cost to citizens, particularly in the developing world. There is increasing realisation that transparency of beneficial ownership is a critical tool to prevent and tackle corruption and other illicit financial flows; and as a global issue, there must be a global effort to eliminate the secrecy that provides a safe haven for corrupt money.
In the last three years, there have been significant moves towards greater global transparency:
- The G7 and G20 have made transparency in beneficial ownership a key priority;
- At the London Anti-Corruption Summit in May 2016, 38 countries made commitments to improve beneficial ownership transparency[2], several of which included commitments to national public registers;
- Beneficial ownership transparency became a requirement of the EITI Standard for all oil, gas and mining companies in over 50 countries;
- The European Union is requiring all member states to establish public registers;
- Countries, including Denmark, Ghana, Norway, the UK, Ukraine and Zambia, have passed national legislation enabling beneficial ownership transparency and are working towards, or already have established, public registers; and
- The World Bank is publishing the beneficial owners of any company winning a contract on any large Bank-funded project from 2018.
However, international architecture lags behind these developments, and the capacity, tools and technical assistance needed to develop national and public beneficial ownership registers are not yet in place.
This session asks how these obstacles can be overcome and what the challenges are at a country level in creating national registers and making them public. Looking further ahead, it asks what is needed to achieve a global norm of beneficial ownership transparency and how can we harness international and national leadership to this end?
[1]Stolen Asset Recovery Initiative Puppet Masters: how the corrupt use legal structures to hide stolen assets and what to do about it (2011)
[2] Including Afghanistan, Argentina, Australia, Brazil, Bulgaria, Canada, Colombia, France, Georgia, Germany, Ghana, India, Indonesia, Ireland, Italy, Japan, Jordan, Kenya, Malta, Mexico, Netherlands, New Zealand, Nigeria, Norway, Republic of Korea, Romania, Russia, Singapore, Sri Lanka, Switzerland, Tanzania, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom and United States.
