Christian Aid Statement on Beneficial Ownership to the UNCAC Implementation Review Group Briefing for NGOs

Vienna, 30 May 2013, by Eric Gutierrez.

Mr. Chairman, distinguished delegates,

My name is Eric Gutierrez and I am the Senior Adviser on Accountable Governance at Christian Aid, an international NGO with offices in 45 countries. We would like to thank you for this opportunity to raise our concerns over the critical issue of beneficial ownership.

Dirty money flows so easily through the financial system for two reasons. First reason: it is simply so easy to set up a company with unknown or hidden owners, that even a dead man can do it. Mr. Chair, we have a documented case of how the identity of a dead man was stolen to hide the real owners of a UK-registered company that owned an account in the largest bank of a Central Asian country. This company transacted business across many borders and jurisdictions, held company meetings and assemblies, even when its declared owner has long been dead.

But dead men and hidden owners can’t do it by themselves. The second reason why so much dirty money flows through the financial system is that there is a whole service industry that is willing to do business with the owners of dirty money. As we know now, even HSBC, a reputable bank and the biggest in Europe, has been found by the United States Senate of allowing itself to be used to launder money for Latin American drug cartels.

Mr. Chair, any person inside this hall found carrying a fake passport face up to 10 years imprisonment. The criminal fraudsters who make these fake passports face longer prison terms. But owners of dirty money, who carry with them fake companies, can get away with their deed, simply because they are allowed to hide their identities. Lawyers who do the actual work of setting up fake companies; bankers and accountants who open bank accounts for these fake companies; real estate agents and other professionals who purchase properties on behalf of these fake companies – they are not being held accountable for the damage they are doing to society.

Mr. Chair, distinguished delegates, there was a time not too long ago when slavery was legal. During that time, a slave owner was not violating any law by keeping another human being as his personal property. A trader of human beings was no different from a trader in goods. A ship captain transporting slaves was simply a “professional” fulfilling a contractual obligation of “moving human cargo”. Today, similar parallels can be seen in the global financial system. The service industry for dirty money can claim that they comply with the letter of the law. But like slavery when it was legal, what they are doing is causing untold misery and suffering.

Reforms to eliminate the secrecy of ownership have been resisted on the grounds of protecting privacy. The UNCAC Civil Society Coalition believes that indeed, individual and corporate privacy need to be respected, but not at the expense of the wider public interest. If privacy is being abused to corrupt society, to protect financial wrongdoing, and to reward criminal activity, something must be done about it.

Mr. Chair, a solution to these problems is in your hands. This solution is called the “United Nations Convention Against Corruption”. Articles 14 and 52 of the UNCAC spell out what must be done, including the creation of publicly-available registries of beneficial ownership. The chapter on International Cooperation provides the measures on how authorities across jurisdictions can collaborate to effectively solve the problem.

We call on you, distinguished delegates, to continue to uphold and enforce these particular mandates of the UNCAC that will eliminate the secrecy of ownership.