In a timely coincidence, new beneficial ownership rules to tackle money laundering was a key strategic initiative announced by the Financial Action Task Force (FATF). FAFT’s announcement is available at Outcomes FATF Plenary, 2-4 March 2022.
According to the announcement:
“Anonymous shell companies and other businesses enable organised criminal gangs, the corrupt and sanctions evaders to launder their dirty money. That is why the FATF has agreed on tougher global beneficial ownership rules to stop criminals from hiding their illicit activities and dirty money behind secret corporate structures.”
While listed as recommendations, these rules carry a great deal of gravitas. FATF is an intergovernmental body and anti-money laundering watchdog, whose recommendations strongly influence governments’ policies.
Highlights of the new rules include the following:
- Beneficial Ownership registers will be a requirement for all countries. An alternative mechanism may be implemented if it provides authorities with efficient access.
- The company approach - where authorities rely on information collected by companies themselves - cannot be considered a mechanism
- Countries should obtain beneficial ownership information of foreign-created legal persons which have sufficient links with their country.
- This Beneficial Ownership information must be verified
- Access to Beneficial Ownership information needs to be available in the course of public procurement
Transparency International and local chapters including TINZ have been strong advocates of movement in the direction of transparency in beneficial ownership. These new rules are a significant step in the right direction.
Not unexpectedly, missing from the new rules is a requirement for this information to be publicly available. We continue to advocate for open beneficial ownership records to greatly increase the resources available to dig through the labyrinth of company ownership and hidden assets.
For many the work now is just beginning. Two hundred jurisdictions will need to determine how to comply with the new recommendations. The TI Movement will be working to ensure that new systems and registers are as efficient as possible.
Beneficial ownership of companies is covered in Recommendation 24. The FATF has also indicated their intention to review Recommendation 25 which deals with trusts. TINZ has a strong interest in seeing action to substantially increase the transparency of trusts. New Zealand’s opaque trust regime and low corruption reputation make NZ an ideal conduit for money laundering and asset protection among the corrupt.