What's Next on Beneficial Ownership, OGP Summit Tbilisi, July 2018

Notes from session on What’s Next on Beneficial Ownership? Company Leadership and Implementation through National Action Plans at OGP Summit 2018, Tbilisi, Georgia

“What’s Next on Beneficial Ownership? Company Leadership and Implementation through National Action Plans.” Moderated by Robin Hodess. July 18, 2018.

Jose Maria Marin, Transparency International

Timely, accurate, up-to-date, timely information crucial to fighting IFF. Now: systems rely on information collected by financial institutions and designated non-financial businesses and professions. This is not enough to secure convictions. Central BO register is an alternative solution.

3-5 years - push towards BO registers as a tool for fighting corruption. Milestones: approval of AMLD5. Brazil adopting legislation to disclose some information to tax authorities. Ghana and Nigeria’s legislation [Kenya being drafted]. Heading for a total of 45 jurisdictions by 2020.

Trusts are in the policy dialogue - should they be in scope?

Great to see commitments - but commitments should be made within the OGP framework because advances can be tracked and shared.

Zosia Stzykowski, Project Lead, Open Ownership

Launched just over a year by leading transparency organisations, including B-Team and TI.

Vision is of a world in which corporate transparency is totally normal, and where secrecy creates intense scrutiny. Will create high-quality, usable linked⊕ Given connotation of “linked” data, use interconnected, linked-up or joined-up instead? data.

Driven by use cases of the data: publish once and use anywhere: civil society investigators, public and private due diligence, etc.

Open data format: creates many more users. Structured data allows for cheaper, re-usable analysis of company ownership. Beneficial Ownership Data Standard is the conceptual and practical framework. OpenOwnership register is a demonstration of the value of this kind of data.

Beneficial Ownership Transparency Network to share best practice among implementing countries and publishers.

Yunus Husein, Chair, Research Centre on Anti-Money Laundering

Transparency of BO important. Companies often used to process the proceeds of crime.

BO transparency offers inherent benefits to Indonesia, including around asset recovery.

Important push factor for Indonesia is compliance with international standards around exchange of tax information, money laundering and terrorist financing.

Three pieces of legislation (Presidential decrees): BO of bank accounts, companies, trusts. [Is there a copy of this legislation in English?]. Part of the NAP and part of EITI roadmap. Challenge of having several registries.

Verification: the truth comes out in transactions. ⊕ Make link between account custodianship in, e.g., CRS and beneficial ownership.

David Ugolor, Executive Director, Africa Network for Environment and Economic Justice

BO register a key anti-corruption tool. Went to the UK and took lessons on how important BO was from that. Panama and Paradise Papers showed how important money-laundering was.⊕ This also causes problems - re-creating the problems in UK register and legislation. CAC is working on compliance even before commitment.

Still lacking key strategic laws on asset recovery and management of assets post-recovery.⊕ This means that it makes sense for physical assets and proceeds of accounts to be tracked in a ledger-like fashion - but we start hitting budget lines and so on.

Erica Westenberg, Director of Governance Programs, Natural Resource Governance Institute

In all leading countries mentioned, there has been extractives-specific legislation.

Strong case to find the synergies between contracting or extractives commitments and beneficial ownership, especially (1) at the licensing moment ⊕ But important to keep tracking BO declarations over time. (2) on the formation of joint ventures.

Asked: What do we do when flawed legislation is passed? There is a lot that can be done through regulations, guidelines and documentation.

James Swenson, Global Head of Proposition for Risk Managed Services, Thomson Reuters

Regulatory environment increasingly demands proof that beneficial owners have been identified. One way banks do this is upfront - this takes up to 90 days and if companies can’t do so go into the high-risk bucket. ⊕ The number of false positives surely lets a lot of bad actors through the net. Makes the distinction that even the minority of corporate registries that disclose some ownership information are not neccessarily [are definitely not] disclosing beneficial ownership information. AI might be usable.⊕ BO data is almost by its nature human-scale - requires a lot of investigation once it’s out there.

Asked: Financial institutions due diligence creating downtime - how does need for transparency interact with commitments on ease of doing business?

Response: businesses want to know who they are doing business with. (US also using the term beneficial controllers in this context.) It often makes it easier for smaller companies to become suppliers. Banks will do the process once. ⊕ If banks are taking the information once, then that is a huge loophole. Yunus Husein adds: Indonesia gives companies a year to protect companies acting in good faith.

Questions

Anti-Corruption Coaltion, Armenia: How to query information - to find officials and politicians. ⊕ PEP status flag makes this easy - but requires political will and regulatory compliance. To find people more generally, unique identifiers for people (possibly meaningless ones) are the optimal solution. We are seeing a spectrum of uniquely identifying information being added to registers: UK (none at all), Nigeria (a lot planned), Myanmar (a lot there but individual data points got removed when it threatened powerful political figures - this one might be legal ownership?)

Fabio Teramo, Italy: Implementing AMLD - but also FATF, and also doing peer review with Global Forum. Are there moves to co-ordinate ⊕ I think we need a mapping tool that shows “If you are here with public BO disclosure, then you are here with FATF etc.”

Eddie Rich, EITI

10 EITI Asian countries having an in-depth discussion on implementation: defintions, sanctions, collection. 51 countries committed by 1 Jan 2019. A lack of financial and techincal support: we’ve won the argument and lost the follow-up.⊕ Possible: linked SDGs; regional MDBs.

How deep should beneficial ownership reporting go, given deep networks of ownership and resource constraints? ⊕ Again, there is an argument for a mapping tool. “If you have a direct/indirect flag you can do this” etc. This should follow on from the policy checklist. Would also note that there is a leverage effect from more countries opening registers, which means that the next declaring entity becomes a viable target to capture full chains.