(C) Transparency International This story was originally published by Transparency International and is unaltered. . . . . . . . . . . CPI 2023: Trouble at the top - News [1] [] Date: 2024-01 There is no doubt that anonymous corporate structures are key features of cross-border corruption schemes. Recent years have brought progress, with more and more countries requiring companies to disclose their real or “beneficial” owners. But top-scoring countries still have a long way to go to ensure that no one can hide behind various types of secretive vehicles within their borders. Companies now have to disclose their beneficial owners to a government register in the United States (69), where the corrupt and criminals have been able to set up anonymous companies with great ease. However, as things stand, it is unclear if information submitted by companies will be verified. Unless addressed, this would significantly jeopardise the impact of these new rules. Another potential loophole is related to trusts, which have also been known to be exploited by foreign elites, as not all such arrangements will have to disclose their ultimate owners. Australia and Canada – both of which have declined on the CPI over the past decade – have also taken steps towards greater corporate transparency. Australia (75), which has been lagging behind its G7 and G20 peers on corporate transparency measures, has committed to a public beneficial ownership register and is planning to hold consultations in 2024. Meanwhile, Canada (76), where legislation to create a publicly accessible beneficial ownership register was approved in late 2023, can emerge as a leader on corporate transparency if the federal government is able to expeditiously reach agreements with all provinces to ensure comprehensive coverage. Recent revision of the global standards on beneficial ownership transparency of companies and trusts is expected to spur much-needed change across the world, including in some of the top-scoring countries. Last year, in an effort to meet the requirements of the new standard, the Swiss (82) government finally proposed to set up a beneficial ownership register of companies. To make the forthcoming register fit-for-purpose, it should collect information on the real owners of trusts, too. Considering their watchdog roles, it is also critical to ensure that civil society and media can access the data held in the register. Thanks to this month’s agreement on the new EU directive, civil society, media and other actors with “legitimate interest” will be able to obtain generalised access to beneficial ownership registers across the bloc. While welcome, this is a step backward from the previous regime when information had to be publicly disclosed. This regression follows the 2022 ruling from the EU’s highest court which struck down public disclosure provisions in EU legislation. One year after the ruling, Transparency International’s analysis found that access to information about companies’ real owners was significantly restricted for civil society and journalists across the EU. Ireland (77), for example, currently requires journalists and activists to provide not only proof that they are engaged in anti-money laundering work, but also demonstrate that a company of interest is connected to financial crime. In practice, this may hinder most access requests as this approach expects applicants to already know the very information they are seeking to uncover. With Ireland’s importance as a financial centre growing, the country needs to ensure utmost transparency in the ownership of all types of vehicles that are currently vulnerable to abuse. The ruling has also had a negative effect beyond the EU, with Norway (84) now backtracking on its plans to create a publicly accessible registry. Even when countries have stringent beneficial ownership disclosure obligations in place, if these are not properly enforced, shady actors will take advantage. A July 2023 analysis of company beneficial ownership data in France (71) showed that nearly one-third of all active companies have not declared their beneficial owners. This includes foreign owners of French-registered companies, such as politically exposed persons from Russia and Latin America with luxury real estate dotted across the country. Overall, it’s impossible to identify the beneficial owners of 61 per cent of all companies that hold real estate in France. Positively, the United Kingdom (71) recently created a register of the owners of foreign entities which hold properties in the country. While this has already brought some transparency over who owns high-value real estate long-favoured by the corrupt, an analysis of the data contained in the register has revealed some shortcomings. Critically, the register does not contain information on the ultimate owners of foreign companies which are held by trusts. Following pressure from civil society and a cross-party group of parliamentarians, the government has launched a consultation on how this gap could be addressed. It is imperative that future changes include a solution for ensuring better access to information on these trusts for civil society and journalists. [END] --- [1] Url: https://www.transparency.org/en/news/cpi-2023-trouble-at-the-top Published and (C) by Transparency International Content appears here under this condition or license: Creative Commons CC BY-NC-ND 4.0. via Magical.Fish Gopher News Feeds: gopher://magical.fish/1/feeds/news/transparency/