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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Public access is critical for UBO register success

Our respective organizations have long been committed to the creation of a global standard of public access to beneficial ownership information. That is why we helped launch OpenOwnership, whose mission is to support countries to publish public beneficial ownership data that is freely accessible, easy to use and connected globally.

We believe that healthy democracies, better economies and human well-being depend on it.

The evidence in favor of public Universal Beneficial Owners (UBO) registers is strong, which is why an increasing number of very diverse stakeholders support them, including: leading banking industry associations; business executives; government regulatory agencies; public prosecutors and anti-corruption experts; the 52 countries and leading extractive companies participating in the Extractive Industries Transparency Initiative; European Union member states implementing the 5th Anti-Money Laundering Directive; and hundreds of civil society organizations around the world.

The benefits of public UBO registers are numerous. They can enable increased competitiveness in business environments, helping ensure that government and commercial contracts go to the company best suited for the job. They empower businesses to conduct due diligence on potential partners and suppliers, reducing fraud and corruption. They can reduce the cost and complexity of due diligence and risk management and help level the playing field for SMEs to access markets. They are likely to increase the stability of financial markets and enable investors to better allocate capital. They also are likely to be more cost effective than private registries.

Public UBO registers play another critical role that gets less attention: they help build and maintain citizen trust, in at least two ways. First, citizens need confidence that government authorities are actively enforcing the rule of law without bias or prejudice. Private UBO registers, whose cross-border functioning relies heavily on mutual legal assistance treaties, risk being politicized, and thereby can further undermine trust, which is already at low levels. Private registers also place a great deal of authority – and trust – in a government’s ability and willingness to pursue criminal investigations into, say, the ruling party’s members or donors.

Second, citizens are unlikely to trust their governments to fully investigate crimes involving senior officials or their associates. That skepticism is validated by the reality that dubious deals involving anonymous shell companies and government officials often come to light because of the work of investigative journalists or law enforcement in other countries. In recent years, that’s been the case in Angola, Brazil, China, Equatorial Guinea, Hungary, Iceland, Nigeria, Russia, the United States, and elsewhere.

In an era of historically high levels of inequality and increasing concern about state capture, citizens must feel assured that public policy decisions are being made to advance and protect the interests of society. Public UBO registers enable investigative journalists and citizen watchdog groups to identify and expose efforts to use corporate vehicles in ways that are damaging to societal interests.

For instance, Transparency International discovered in the Slovak Register that the Prime Minister of the Czech Republic was the UBO of a firm that owned a media company, an apparent violation of his country’s laws. The Panama Papers and Paradise Papers exposed large-scale tax evasion, tax avoidance, and political conflicts of interest. The Lux Leaks investigation uncovered systemic abuse of corporate entities to lower multinational corporations’ tax obligations.

The reality is that combatting complex cross-border crime requires complex collaborative analyses, something at which governments and law enforcement are notoriously slow and ineffective, even assuming the best of intentions. The Panama Papers are illustrative: it took hundreds of journalists working in 25 languages across nearly 80 countries to unravel the interwoven threads of a high number of illegal or highly questionable schemes.

Consequently, and thanks to follow up by public prosecutors in many jurisdictions, investigations have been launched in more than 80 countries and governments have credited the Panama Papers for the recovery of more than $1.2 billion.

In theory, legal authorities could have uncovered these dubious activities. That they didn’t is a problem and underscores the reality that private UBO registers are not a comprehensive solution. Operating within resource constraints, law enforcement and tax authorities are often only reactive in their efforts to combat crime. To illustrate: in the UK, authorities investigate less than 1 percent of the 280,000 suspicious activity reports (SARs) that financial institutions file each year.

We do have evidence, however, that public UBO registers are useful to legal authorities. Since the UK introduced its public UBO register, inquiries from law enforcement to Companies House for help in investigations has increased from an average of 11 to 125 requests per month. That corresponds with a 500 percent surge in the number of SARs filed in relation to company activities.

Of course, public UBO registers are only as valuable as the quality of information they contain. Current public UBO registers, like the UK’s, have significant flaws that must be fixed. Steps must be taken to ensure that the information in public UBO registers is verified and actively monitored for quality assurance. As with most complex public policy, getting public UBO registers exactly right will be an iterative process.

Despite their current shortcomings, however, it’s abundantly clear that public UBO registers are a critical tool for combatting increasingly complex crime and corruption, including ending the use of anonymous companies. Public information about company ownership offers a practical tool for investigation and creates grounds for optimism – bolstering people’s trust that the global financial system can operate fairly – and helps build a more level playing field for business.

OpenOwnership is a partnership with Global Witness, Open Contracting Partnership, The B-Team, The ONE Campaign, Transparency International, and Open Corporates with funding from UK Aid. 

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1 Comment

  1. Please help me to understand the apparent inconsistency of values between GDPR and open public display of beneficial ownership.
    How can we protect individuals from criminals who would use the information about beneficial ownership for illicit purposes?

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