The latest Corruption Perceptions Index results again underline the need to tackle corruption and its enabling factors head on. Money laundering is a key enabler of corruption, tax evasion and illegal activities, and there is widespread agreement on the importance of dealing with the issue. One of the key elements to fight money laundering is identifying the beneficial owners (BO) of legal entities and arrangements.
During the 2018 International Anti-Corruption Conference in Copenhagen, Transparency International and the Open Government Partnership (OGP) held a session where we asked a group of bright minds what 2019 has in store for anti-corruption and the OGP, including what the OGP community can do to advance beneficial ownership transparency. In this post we will share what was discussed during that session.
You can read more about Transparency International and the OGP’s collaboration in the opening post to this blog series.
Recently, the prolific use of shell companies has entered the international policy agenda after revelations concerning two large law firms (see here and here). This spotlight has raised the profile of beneficial ownership transparency and policy recommendations aimed at making BO information accurate, comprehensive and easily accessible. Within the OGP, 18 countries have already included commitments on beneficial ownership transparency (BOT), which presents an opportunity to maintain momentum on implementation, draw lessons from early-adopter countries and provide guidance to countries in early stages of implementation.
Here are the key ideas related to beneficial ownership transparency that came out of the 2018 IACC discussion group:
i. Development and promotion of BOT standards
Participants and partners of the OGP can develop the highest standards on beneficial ownership transparency, and advocate for them. Based on the experience of early adopter countries as well as innovations from civil society, forces could be joined to develop complements to current international standards on issues such as public disclosure, verification and interoperability (see for example the work being done by Transparency International and Open Ownership). The policy community can embrace the open government principles of transparency, participation and accountability to ensure beneficial ownership information is used to stem illicit financial flows and its sources, like corruption.
ii. Sharing knowledge and coordinating policies
The OGP can be a space for knowledge sharing and policy coordination. It has a diverse stakeholder group that’s willing and able to contribute to the ambitious implementation of BOT measures and allows the OGP to gather cross-sector expertise around the table. Thus, public sector institutions (government agencies, tax authorities, financial regulators), open data gurus, anti-money laundering experts, legislative specialists and the business sector can share their knowledge. With some coordination, this policy community can be a valuable on-demand resource to countries starting implementation of beneficial ownership transparency commitments. It can also help ease concerns of countries thinking of engaging in such a policy reform.
iii. National advocacy based on global standards
In-country civil society actors can use the OGP co-creation and implementation process to advocate for and support implementation of BOT commitments based on global standards and best practice. This can help increase the quality and quantity of promises made by countries to develop comprehensive policies on beneficial ownership transparency and in doing so close the gap between promises made at the international level and actions taken within countries.
iv. Concerted and joint efforts
The OGP can use its global reach and political capital to encourage wide adoption of beneficial ownership transparency. One of the challenges of implementing anti-money laundering policies is the need to minimise the number of jurisdictions which are at risk of enabling illicit financial flows. In that respect, the large number of participating countries in the OGP is an opportunity to take a concerted joint effort by countries to adopt BOT policies.
OGP participants and partners can leverage knowledge from within the informal network of countries and organisations working on BOT to provide solutions to implementation challenges and visualise the impact of such reforms.
The group of early-adopter countries can provide a wealth of information on implementation challenges and solutions around BOT which is a policy area that is still searching for best practices. By harnessing this collective knowledge, the OGP community can become a policy resource to the BOT and anti-money laundering community at large.
For more information and recommendations on beneficial ownership transparency for OGP action plans check out this brief.
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