A prominent Swiss lawyer points to a recent OECD report on how dozens of jurisdictions perform regarding beneficial ownership data. The organisation was critical of the US, stating that the Corporate Transparency Act is toothless over non-US businesses.

The Organisation For Economic Co-operation and Development gave the US a “Largely Compliant” verdict on transparency and control of beneficial ownership data, but it is unlikely to cut the US’s ratings on that score, a senior lawyer in Switzerland says. 

The Paris-based body, which represents industrialised nations and pushes for standards in areas such as financial disclosures and the fight against money laundering and tax evasion, recently issued a 263-page report. It covers a range of jurisdictions, such as Singapore, the UK, Liechtenstein, Switzerland, Cayman Islands, Monaco and Luxembourg.

The document, which examines how rigorously governments store and disclose beneficial ownership data, spells out the rules governing this activity. 

“The USA is currently `Largely Compliant’, but don’t expect a downgrading of its rating – at least not by the Global Forum,” David Wallace Wilson (main picture), partner, head of private client wealth group, Geneva, at Schellenberg Wittmer, said in a note on his LinkedIn profile. Wilson is also a member of WealthBriefing’s editorial board. 

The OECD’s verdicts on the US were “harsh,” Wilson said. “The USA must now submit an update on the progress made by 31 March 2027. What will happen if they don't?” he wrote.

With the muscle of having the world’s reserve currency, and a worldwide system of tax imposed on US citizens and expats, the US is often willing to use its powers to stamp out financial wrongdoing as it sees it. A concern in Switzerland, which has tangled with the US over the Alpine state's bank secrecy rules, is that the US does not always practice what it preaches. 

The OECD noted, for example, that the Corporate Transparency Act (CTA), which took force in January 2024, is now seriously restricted in scope, limiting reporting requirements to foreign entities and their beneficial owners. The House Committee on Financial Services voted 26-25 on 21 April to advance legislation which would limit the scope of the CTA.

There is still tension between calls for more transparency on beneficial ownership data, and privacy. For example, in the European Union, a move towards transparency under the Fifth Anti-Money Laundering Directive was reversed in November 2022 by the Court of Justice of the European Union, citing privacy worries. Presently, use of such information is restricted to certain groups that must show a "legitimate" interest, which begs questions as to how that's defined.

No enforcement
The OECD report said of the US situation that “currently, there is no enforcement of penalties or fines on domestic entities or foreign entities that fail to report their beneficial owners.”

The organisation said that the concept of beneficial owner, as applying to tax filing and anti-money laundering rules, remained “deficient.”

“Regarding coverage, there are no requirements ensuring that all entities and arrangements identify or report their beneficial ownership information, nor are there requirements for all entities and arrangements to engage an AML-obliged person in an ongoing relationship. Further, there are no ongoing supervisory or enforcement actions related to the Corporate Transparency Act obligations,” the OECD report said. “Akin to the situation at the time of the 2018 Report, there are no complete obligations in the legal and regulatory framework on the identification of beneficial owners of trusts.”

Summing up on the OECD report about the US, Wilson said the report made "bitter conclusions, but not surprising for international private wealth practitioners."