Beneficial ownership transparency means that the ultimate owners of an entity – i.e., the natural persons who control an entity possibly through a web of different companies, trusts, foundations or other entities –, are disclosed through a central public registry. Several countries have recently established national public registries of beneficial owners, and others are currently in the process of implementing beneficial ownership commitments they have made. However, it is essential that all jurisdictions mandate the public disclosure of ultimate owners of entities, in order to avoid safe havens that can be misused for corruption.
The vast majority of grand corruption cases involve the use of shell companies and other opaque and complex corporate vehicles. Central registries of beneficial ownership information result in more effective and faster national and international investigations, as law enforcement officials and financial intelligence units can quickly establish who controls a legal entity. Banks and other entities that have to comply with anti-money laundering regulations can more easily and effectively establish who their customers are.
Crucially, beneficial ownership registries need to be freely accessible to the public online. This allows international law enforcement bodies to easily access the information without having to go through mutual lengthy legal assistance procedures. Public access also benefits businesses by reducing transaction and due diligence costs: Nine out of ten senior private sector executives say it is important to know the ultimate beneficial ownership of the entities with which they do business. Public access also allows the media, civil society organisations and the general public to monitor who benefits from public funds, for example through public procurement contracts or grants awarded to companies in response to the COVID-19 crisis.
Key Asks
- Member States should make a firm commitment to creating national-level online public registers of the beneficial owners of companies, foundations, trusts and all other legal entities and arrangements (i.e., the natural persons who ultimately control an entity, possibly through several other legal entities), with timely and accurate information that is freely accessible online for law enforcement, competent authorities as well as the public (UNCAC Articles 12.2(c) and 14).
- Member States should promote compliance with the beneficial ownership regime. Member States should also put in place mechanisms for the verification of data, as well as effective, proportionate, and dissuasive measures or sanctions, while ensuring an efficient and effective framework that minimises the administrative burden and costs with the public and private sectors.
- Member States should commit to collecting and publishing beneficial ownership information of all bidders and partners in the public sector, including companies that participate in public procurement, joint public-private partnerships, receive financial or non-financial state aid, licenses, permits, and natural resources-related contracts, take part in the privatization of public resources or otherwise are party to public contracts or agreements.
- Member States should coordinate efforts in defining and implementing international norms on beneficial ownership transparency regimes. They should also initiate an inclusive and collaborative process to define and adopt a common data format to record beneficial ownership information in order to enable interoperability with other data sets, to make use of all available information to investigate corruption and money laundering offences and to identify recoverable assets. This collaboration, an analysis of good practice approaches and lessons learned, and the development of new norms could be carried out within the UNCAC Working Group on Prevention.
- Furthermore, to promote transparency in the private sector (UNCAC Article 12), Member States should make company registries freely accessible online and commit to ensuring that adequate, accurate and current information on corporations and other legal entities, including on officers, directors and direct owners, is accessible in real-time in a standardised open data format, utilising free, searchable, public online platforms in order to facilitate access for law enforcement agencies, financial institutions and obliged entities, as well as the general public.
Resources for further reading
Articles:
- The new UNCAC resolution on beneficial ownership: a real step forward, January 2022
- UNCAC Coalition submission to FATF consultation on beneficial ownership, 25 August 2021
Policy Briefs:
- UNCAC Coalition Briefing Note on Beneficial Ownership Transparency
- Beneficial ownership in law: Definitions and Thresholds, Open Ownership
- Verification of Beneficial Ownership Data, Open Ownership
Webpages:
- The Open Ownership Map: Worldwide Commitments and Action
- The Beneficial Ownership Leadership Group, convened by Open Ownership and Open Government Partnership
- Principles for Effective Beneficial Ownership Disclosure, Open Ownership
- The UK’s Performance against the Open Ownership Principles
- Transparency International Petition, UNGASS 2021: Commit to Transparency in Company Ownership for the Common Good
Reports and Guides:
- Anti-Corruption Initiatives: Beneficial Ownership, Open Government Partnership Global Report