Next week governments can take a step to close down secrecy jurisdictions. Will they?
National financial regulators attending the Financial Action Task Force (FATF) plenary in Paris 16 – 21 February have the opportunity to significantly reduce money laundering, corruption and terror financing.
They must not squander the opportunity.
Members of the FATF will decide on proposals to review Recommendation 24, which requires countries to ensure that competent authorities have timely access to adequate, accurate and up-to-date beneficial ownership information.
Civil society groups The B Team, Global Witness, Open Ownership, The Tax Justice Network and Transparency International urge delegates to support proposals in which Recommendation 24 mandates verified, central registers of beneficial ownership information. Such registers must be public and online in an open data format.
Open data registers enable analysis by a wider group of users, including media and civil society, which leads to improved data quality. Open registers also facilitate the development of investigative tools and techniques that can help improve enforcement of anti-money laundering regulations. Furthermore, such registers facilitate international cooperation and can be linked to other public databases.
The new edition of the Financial Secrecy Index to be published on Wednesday will once again show that secrecy jurisdictions exist in large and small economies from the Americas to Asia, Europe to Africa, and from the Pacific to Middle East. The Luanda Leaks are only the most recent investigation to show that corrupt networks will seek out and exploit jurisdictions that function as loopholes in the global anti-money laundering system. The FATF is the only entity with global jurisdiction to sanction countries that provide a haven where criminals and the corrupt can hide and launder the ill-gotten proceeds of their crimes.
A 2019 study by Transparency International found that of the 83 countries assessed by FATF since 2014, only one fully complies with Recommendation 24. No country is considered to be ‘highly effective’ in this area. Recommendation 24 must become a robust and effective standard for ensuring that law enforcement can find out who owns and ultimately benefits from companies suspected of money laundering and other financial crimes. The FATF’s own country-level reports make clear that central registers of beneficial ownership information are the most effective way of obtaining this information.
Failure to proceed with the much needed review of the Recommendation would run counter to commitments made by influential members of the FATF through other forums such as the G20 and the G7 and global platforms like the Open Government Partnership.
The opacity of the FATF plenary – the agenda is not made public before the meetings; civil society observers are not allowed to attend; voting is not made public – must not be an excuse for governments to continue to enshrine secrecy in the global financial system.
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