Call for publication of beneficial ownership on public registers
Berlin – The Group of 8 rich countries must commit to concrete action to make the global financial system more transparent, anti-corruption group Transparency International said today. G8 governments should agree to fulfil existing pledges to make all companies publicly register the names of their real, beneficial owners.
The run-up to the G8 Summit – taking place in Fermanagh, Northern Ireland on 17-18 June -- has seen great pressure on leaders to prove their willingness to respond to calls for greater transparency to strengthen efforts to stop corruption.
“The world expects its leaders to tackle financial crime. There is now real momentum and strong public demand for significant change toward increased financial integrity. This G8 summit is in a position to commit to next steps. Something concrete must emerge from Fermanagh,” said Huguette Labelle, Chair of Transparency International.
David Cameron had promised that the UK presidency of the G8 would focus on ‘three Ts’: trade, tax and transparency. His drive for greater cross-border sharing of financial information recognises that the current state of affairs damages individuals, societies and economic development. This focus must be accompanied by action to force hidden corporate structures into the light.
Fifteen prominent anti-corruption activists, including Transparency International chair Huguette Labelle, called on the G8 summit to stop anonymous companies from being used to mask criminal activity and to require company registers to collect information on the ultimate owners of all companies, in a letter dated 7 June.
Strong sanctions against those who provide false or misleading information to company registers, including criminal sanctions for intentional acts of deceit, are also essential.
There is growing consensus that publishing information on who benefits from what corporate entity is an important practical step that governments must take. Company registers already exist, but almost 4 out of 5 of these registries in the European Union, for example, do not even collect the names of companies’ beneficial owners, let alone make them public.
The consequences are significant. The profits of crimes like bribery are often laundered through subsidiaries and shell companies that can be set up in minutes. The structures of companies listed on the FTSE include tens of thousands of such subsidiaries, with more than a third of them located in countries that allow high levels of secrecy, according to ActionAid.
Disclosing beneficial ownership is only the first step, Transparency International warned. G8 governments also must ensure banks are serious and effective in conducting enhanced anti-money laundering due diligence checks on politically exposed clients.
G8 governments can build further momentum by encouraging more countries to join the Global Forum on Transparency and Exchange of Information and the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters, and support the automatic exchange of financial information.
Transparency International welcomes clear G8 commitments to ending financial secrecy and which will prove a major step forward in preventing the flow of corrupt money into the global banking system.
On 19 April 2013 G20 Finance Ministers stated the need tackle the risks raised by “opacity of legal persons and legal arrangements” in their post-meeting statement, but stopped short of a commitment to firm action. On 11 May, G7 finance ministers promised collective action to tackle tax evasion and avoidance. Three days later, EU finance ministers agreed the need for EU-level action to tackle tax evasion.
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Transparency International is the global civil society organisation leading the fight against corruption.
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