NEWS ANALYSIS: Major European Countries Turn Up The Heat For Beneficial Ownership Data

Chris Hamblin Editor Compliance Matters and Offshore Red 18 April 2016


Some of the leading countries in the European Union have signed a deal to, they say, enhance how beneficial ownership data is shared, a move coinciding with the recent storm about Panama.

The largest nations in the European Union have arrived at a memorandum of understanding relating to sharing information about the beneficial ownership of trusts and companies, aiming to pour oil on the turbulent waters of the offshore world following the Panama Papers soap opera.

UK premier David Cameron promised the leaders of the “Group of 8” industrialised nations in 2013 that his government will initiate a registry of beneficial owners, later deciding that all details on it would be made public. A period later, the EU itself ordered all its countries to set up their own registers, leaving open the option of publicising the details. The latest agreement, reached at a meeting of the International Monetary Fund last week, is of interest because the other great powers of the EU have not decided to publicise entries on their registers; a quick-fire exchange of data therefore requires an MOU of this kind.

The efficacy of this type of agreement is going to be limited, however. This is because of two main factors:

-- Holdings under 25 per cent in companies and certain trusts are not disclosable. This is a holdover of an EU meeting in 2005 in which Silvio Berlusconi, the Italian prime minister of the day, had holdings of his own that he wanted to keep obscure - had he had his way entirely, the cut-off threshold would have been nearer 100 per cent;

-- The EU is not asking its nations to include any verifying detail on their registers of the kind that money-laundering reporting officers need when conducting 'know your customer' or 'customer due diligence' procedures.

-- Pekka Dare, the money-laundering training specialist at International Compliance Training, who lectured at the International Compliance Association's conference in London last week, said recently: "The new registers of beneficial ownership rolling out across the G20 (slowly) are arguably at least a gesture towards tackling the issue. However, with no apparent verification of the information submitted by corporate entities, the actual reduction in the amount of criminal abuse of corporate structures is likely to be limited. So the onus will remain on regulated firms and those working in AML roles."

To view the recently-published IFC World guide, issued by ClearView Financial Media, see here. 

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