The G7 Finance Ministers and Central Bank Governors should explicitly, and without mincing words, endorse the global adoption of beneficial ownership registers to prevent kleptocrats from undermining an inclusive recovery from COVID-19, Transparency International said today.
During tomorrow’s virtual meeting and the in-person convening on 4-5 June, the Finance Ministers and Central Bank Governors will discuss ways to advance G7’s priorities. Under the UK Presidency, these include building a green and inclusive global economic recovery, and supporting vulnerable countries recover from the COVID-19 crisis. Transparency International representatives in each G7 country are calling on the Finance Ministers and Central Bank Governors to place particular emphasis on measures for tackling the decades-long abuse of corporate secrecy.
Long before the pandemic, anonymous shell companies were known as a go-to tool of kleptocrats and organised crime groups. Secretive corporate structures have enabled corrupt actors drain treasuries; traffic arms, drugs and endangered species; and exert authoritarian influence on democracies worldwide.
To counter this trend, many countries, including G7 members, have taken significant steps to end anonymous companies by establishing registers of companies’ ultimate, or beneficial, owners. France, Germany and the UK have set up and made their registers publicly available, with Italy planning to establish one soon. Earlier this year, the US Congress passed Corporate Transparency Act, which will pave the way for the creation of a federal register of company owners in the country. Most recently, Canada announced plans to establish a public register.
Recent investigations and scandals confirm, however, that progress in tackling the abuse of anonymous companies will only be possible if information about beneficial owners is available in all jurisdictions, and if authorities are able to make use of that information and cross-check data in a timely manner.
As members of the Financial Action Task Force (FATF), which sets international anti-money laundering standards, G7 countries also have a unique opportunity to push for advancing beneficial ownership transparency globally. The FATF is currently reviewing its recommendations on beneficial ownership transparency, presenting a unique opportunity for the G7 leaders to unequivocally endorse proposals for banning anonymous company ownership in all jurisdictions.
“We are aware of the determined resistance within the FATF membership, particularly from key financial centres, but merely cosmetic changes are not enough. When you meet on 4-5 June, we urge the G7 to show its leadership and support a meaningful review of the current global standard on beneficial ownership to ensure it is fit for purpose,” concludes Transparency International’s letter to the G7 Finance Ministers and Central Bank Governors.
Notes to editors
- The FATF requires governments to ensure that authorities can find out who the real or ‘beneficial’ owners of companies registered in their territory are, but the current global standard does not specify how that needs to be ensured. Transparency International’s 2019 report, Who’s behind the wheel? Fixing the global standards on company ownership, showed that the flexibility provided by the standard is at the heart of countries’ poor compliance with it.
- In February 2021, a petition from academics, business leaders, public bodies and civil society organisations from 120 countries called on the UN General Assembly Special Session against Corruption, UNGASS 2021, to help set a new global standard on beneficial ownership transparency.
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