Strengthening new norms in beneficial ownership transparency in Asia and the Pacific region
In February, beneficial ownership transparency was top of the agenda in the Asia and Pacific region. Despite turbulence in global financial markets, and challenges in disclosures and market pricing heavily linked to the impact of COVID-19, the region has taken great steps in supporting the acceleration of economic recovery through beneficial ownership reforms. In some Extractive Industries Transparency Initiative (EITI) countries in the region these reforms ensure the availability and use of beneficial ownership data for effective governance in the extractive sector.
Strides being made in Indonesia and the Philippines
Impressive strides have been made in Indonesia, where the implementation of a 2018 Presidential Regulation has resulted in legal entities declaring the identity of beneficial owners and providing information on the details of their ownership. In the Philippines, all corporations registered with the Securities and Exchange Commission (SEC) have been required since 2019 to disclose their beneficial owners in annual reports and. Regulations mandated corporations to fill out a beneficial information declaration form.
Improving data quality through verification, public access and data collection
A three-day workshop organised by the EITI in partnership with the Asian Development Bank (ADB) attracted rich and informative discussions among beneficial ownership practitioners about best practices, common challenges, and impactful solutions. The main themes that came up in discussion were the various challenges in verifying beneficial ownership data and adopting global beneficial ownership data standards. The need to verify and regularly update data was seen as a high priority for governments across the region. This can be achieved through robust verification processes and periodic update requests sent to listed entities.
John Versantvoort, ADB’s Head of Anticorruption and Integrity, stated that ensuring the transparency of the beneficial ownership of corporate entities has become an essential tool in the fight against financial crime. EITI’s Executive Director Mark Robinson emphasised the need for more robust beneficial ownership data collection systems as a tool to fight corruption in revenue management, especially as the resource-rich region aims to recover from the economic impact of the pandemic. Gay Ordenes, EITI Asia Director, further highlighted the role of public access to beneficial ownership registers in enabling data verification, enhancing data quality and supporting data analysis. Louise Russell-Prywata, Open Ownership Director of Policy and Advocacy shared best practices for the collection and disclosure of beneficial ownership data. Open Ownership’s Data and Technology Manager, Stephen Abbott Pugh, guided participants on concepts, practical steps, and the importance of structured data in beneficial ownership data verification.
Extractives companies championing beneficial ownership implementation
On the back of the ADB workshop, an event for companies organised by EITI Indonesia under the Opening Extractives Programme engaged extractive companies in conversation on the importance of beneficial ownership transparency disclosures for companies, the challenges of disclosing beneficial ownership information and how these are being addressed at the global and country levels. The event came on the heels of the recently revised EITI company expectations and built on progress made in increasing company transparency internationally through the EITI since 2018, when the Expectations for EITI supporting companies were first agreed.
Following a recent revision of the expectations, companies supporting the EITI will be expected to publicly declare their support for the disclosure of contracts, licenses and information on the beneficial owners of companies across all EITI implementing countries. They will commit to public disclosure of their beneficial owners and to contributing to public disclosure of contracts and licenses in EITI countries in a way that is consistent with government procedures. The event provided a platform for companies in Indonesia and the Philippines, as well as those that operate in other EITI implementing countries, to share examples of initiatives relating to beneficial ownership transparency and exchange insights on advancing beneficial ownership transparency within their existing mechanisms.
Key insights from Sophie Donszelmann, Senior Programme Officer at the International Council on Mining and Metals (ICMM), reinforced the benefits of beneficial ownership disclosures for companies, describing how they can enhance trust and foster good mineral resource governance. Muhklis Ishak, Vice President of Freeport Indonesia spoke about the devastating impact of illicit financial flows on Asian economies, and the subsequent reduction in funds for economic development. Joan Adaci from Oceana Gold in the Philippines stressed the importance of beneficial ownership transparency in assessing standards, compliance, principles of good mining practice and how disclosure information can avoid corrupt practices. Company involvement in beneficial ownership transparency not only helps to detect possible money laundering, but also facilitates efforts to detect conflicts of interest involving politically exposed persons, improve compliance and strengthen due diligence processes.
Looking forward
As next steps, participants from the region affirmed that more needs to be done in engaging companies in beneficial ownership reforms. Indonesia and the Philippines offer interesting similarities in regulatory frameworks for disclosing beneficial ownership information and in the experience of attaining robust participation from the extractive companies. Progress in both countries demonstrates the importance of private sector leadership alongside government and civil society efforts to support beneficial ownership reforms.
