Beneficial Ownership Verification: Ensuring the Truthfulness and Accuracy of Registered Ownership Information

69 Pages Posted: 5 Feb 2019

Date Written: January 22, 2019

Abstract

In a world where billion-dollar corruption and money laundering schemes can travel through developed countries’ financial institutions undetected, the only chance for any country’s authorities to successfully address financial crime is to apply cutting edge technology for crime detection. At the core of the fight against illicit financial flows is authorities’ ability to verify the identity of the beneficial owners who control the world’s companies and trusts. Applying advanced analytics and inter-connecting ownership registries is the only way to make sure legitimate businesses flourish, while preventing the abuse of legal vehicles that rob countries off their resources and erode trust in democracy and state institutions. This will also be good for real businesses. By helping businesses easily and effectively check their supply chains and the companies they work with business can better prevent sanctioning risks to their reputation for having engaged with the wrong people.

Section 1 of this report briefly reviews the concept and importance of beneficial ownership. It describes countries’ contradictory or insufficient measures in relation to beneficial ownership transparency needed to address illicit financial flows related to corruption, money laundering or the financing of terrorism. Section 2 refers to all the relevant data on beneficial ownership that should be collected in the first place to allow for verification. It summarizes the definitions of beneficial ownership depending on the various types of legal vehicles and their combination. It lists all details that should be collected and it adds new innovative proposals for ensuring registered beneficial ownership is accurate and easier to verify. Section 3 and 4 are the core of this paper and describe the IT system that governments should establish to automatically cross-check and verify beneficial ownership information, both in terms of validity (section 3) as well as advanced analytics for redflagging purposes (section 4). Section 5 discusses issues relating to costs and sanctions for noncompliance.

Suggested Citation

Knobel, Andres, Beneficial Ownership Verification: Ensuring the Truthfulness and Accuracy of Registered Ownership Information (January 22, 2019). Available at SSRN: https://ssrn.com/abstract=3320600 or http://dx.doi.org/10.2139/ssrn.3320600

Andres Knobel (Contact Author)

Tax Justice Network ( email )

Argentina

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