Bringing transparency back
The Week in Corruption, 31 March 2023
Photo: Adam Jícha/Unsplash
It rarely happens, but sometimes we don’t have major notes on a piece of proposed policy.
This week, the European Parliament made a full suite of progressive amendments to draft legislation to increase EU’s defences against dirty money. From bolstering the powers of the forthcoming anti-money laundering authority to fixing risky investment migration schemes, the Parliament is tightening the screws on the corrupt – much like we have been suggesting for years.
We are particularly happy – and relieved – to see proposals for reforming EU’s corporate transparency framework. The Parliament has fully considered our concerns and included strong measures for ensuring that civil society, media and academia are able to find out who’s behind anonymous companies created across the EU.
Why do we need to know who own EU companies? Experts explain in our new video with the Anti-Corruption Data Collective.
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This may not seem like a big deal considering that EU rules previously required governments to disclose information about companies’ real – or "beneficial" – owners to the wider public. Late last year, however, the EU’s highest court struck down the anti-money laundering provision which guaranteed that.
Right now, EU policymakers are in damage-control mode, and understandably so. Going forward, they will need to find a solution outside the anti-money laundering framework to bring back public access to the registers. After all, as the new paper from Transparency International’s Anti-Corruption Helpdesk outlines, beneficial ownership information helps ensure transparency in business-government relationships, combat tax abuse, eliminate dark money in politics and defend against foreign interference.
For all these reasons, corporate transparency was high on the agenda during the Summit for Democracy meetings happening this week. Convened by the US government, the summit brought together country leaders to discuss how they can rescue democracy from its many threats, including corruption. The regional meeting hosted by South Korea, which we helped design, was specifically dedicated to anti-corruption.
One of the summit outcomes announced by the US government is a commitment from 20 countries to enhance corporate transparency in line with the new global standard, which was adopted following our campaign. While an unequivocal pledge is welcome, it’s hardly ambitious: along with 180 other countries, they have to follow the standard.
In the US itself, the federal government has been working to develop rules to operationalise the register following the passage of the historic Corporate Transparency Act in 2021.
Clamping down on corporate secrecy in a major financial centre like the US can really advance the fight against illicit financial flows, to which African countries are particularly vulnerable. That’s why our vice chair Rueben Lifuka – who joined the summit meetings in Zambia – has penned an opinion piece urging on the US government to finalise its rulemaking quickly and flawlessly.
In recent weeks, there has been some justified anxiety over the proposed reporting form that companies would have to fill out. In a self-defeating manner, it contains fields which would allow entities to claim that they are unable to obtain information on their true owners. Our colleagues in the US, other civil society groups and even lawmakers have expressed serious concerns, and now the government is reportedly reconsidering its approach.
Another pending issue relates to the regulation on who will be able to obtain the information and how. As currently drafted, the rule envisions unnecessary access barriers for foreign authorities investigating schemes where anonymous companies formed or registered in the US pop up. So together with Transparency International US and 30 of our chapters we are asking the US government to address this.
More positively, in neighbouring Canada, our colleagues are applauding the government for proposing strong legislation to implement the long-awaited register. As previously announced, it will be public and free to use. This means that investigators, civil society and media around the world will be able to see who’s behind dodgy Canada-registered companies.
We’ll take all these wins. But as with all good things in life, progress takes hard work and vigilance. Together with our movement, we’ll be watching closely to see all these reforms through to the end.
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