Beneficial ownership transparency and the United Nations Convention against Corruption: progress and recommendations
Introduction
The United Nations General Assembly Special Session against Corruption (UNGASS) made history in June 2021. It adopted a political declaration against corruption and member states committed to implementing it. [1] As part of the follow-up process to the special session, the Conference of the State Parties (CoSP) to the United Nations Convention against Corruption (UNCAC) has invited contributions from various actors to help report on the implementation of the Convention and the political declaration. Open Ownership welcomes these significant anti-corruption developments and is pleased to make this submission for the two-year anniversary of the adoption of the declaration. We review global progress on beneficial ownership transparency (BOT) since the declaration, and provide recommendations for advancing BOT commitments and their implementation through the UNCAC.
Open Ownership is an international nonprofit organisation driving the global shift toward transparency over who owns, controls, and benefits from companies and other legal entities (“beneficial owners”). We support governments to make high-quality beneficial ownership (BO) data available and effectively used, and have supported around 40 jurisdictions around the world to implement or improve their beneficial ownership registries and data. Effective use of BO data is critical to help tackle corruption, reduce investment risk, and improve national and global governance. To this end we also provide tools and support to enable all actors to use BO data effectively.
70% of grand corruption cases from recent decades have involved anonymously-owned companies. In this context, the value of beneficial ownership information as an anti-corruption and anti-money laundering tool has been recognised by international standard-setting bodies. [2] [3] [4] The past decade has seen an exponential growth in the number of states committing to develop policy reforms to support the collection and use of BO information for a number of aims including promoting a healthy business environment, protecting national security, combating financial crime, money-laundering, tax evasion and corruption.
However, progress has been slower in turning policy commitments into action. Building on direct technical assistance and research carried out by Open Ownership, this submission highlights evidence of existing good practices and challenges faced by states implementing BOT reforms, and opportunities to accelerate progress through the UNCAC.
Opportunities to strengthen beneficial ownership transparency through the United Nations Convention against Corruption processes
Based on Open Ownership’s review of global and national progress on BOT to date, and the role of the UNCAC processes within this, we highlight the following opportunities to further strengthen BOT through these processes and ensure that BOT is an effective anti-corruption tool:
– Recognise the key roles of the broad range of actors that can help prevent and detect corruption and ensure these actors have timely access, without obstacles, to beneficial ownership information.
From domestic and foreign law enforcement, procurement and licensing officials, through to multinational companies and small businesses, civil society organisations and journalists, recognising the roles that each actor can play is crucial to strengthening both prevention and detection of corruption. Ensuring these actors have timely access to BO information, in conformance with domestic privacy and data protection legislation but without undue obstacles or barriers, better enables these people and agencies to use BO data to detect and prevent corruption, creating a less conducive environment to the secrecy that supports and enables corrupt acts. In practice this is likely to require a range of measures, including data sharing agreements and a legal regime setting out rights to access data.
– Place the specific needs of data users at the centre of policy decisions related to the collection of, access to, and use of beneficial ownership information.
Different agencies and individuals may need to access and analyse information in varying ways. For example, government agencies analysing systemic money laundering risks may require bulk datasets, whereas a law enforcement officer investigating a specific corruption case may require detailed information from certain BO records. Understanding what different users need from BO information to perform their roles in preventing and detecting corruption is essential to maximise the value of BOT as an anti-corruption tool. Placing this understanding at the centre of policy decisions means that the reforms, once implemented, are more likely to meet these users’ needs and deliver anti-corruption impacts.
– Provide robust policy frameworks and guidance to support states in developing harmonised BOT policies and practices that foster inter-agency and international cooperation in the fight against corruption.
There is considerable variation in how BOT reforms are implemented at national level. Providing clear guidance through international mechanisms helps facilitate harmonisation over time, making it more straightforward to connect, share and use BO information from different countries. Given the transnational nature of grand corruption threats, this is imperative both at a policy level and at a technical level. These measures should include:
- Ensuring that beneficial ownership information collected by states is adequate, accurate, and up-to-date, and can be easily connected to other types of information used in investigations into corruption cases.
- Ensuring that BOT is clearly defined in national legal and regulatory frameworks, with the national definition aligned to international standards and norms.
- Using existing standards for the collection, storage and sharing of beneficial ownership data, such as the Beneficial Ownership Data Standard, to enhance interoperability between different national BO registers, and other relevant datasets.
- Provide the widest range of international cooperation to share, exchange and leverage BO data, without unduly restrictive conditions, to prevent and detect corruption.
Specifically, CoSP10 presents an invaluable opportunity to guide States parties in their achievement of BOT. The final section of this document details Open Ownership’s recommendations for areas to build upon following Resolution 9/7 in order to further strengthen States parties’ BOT commitments and advance their effective implementation.
Notes
[1] The Convention does not define corruption, but instead lists and defines a series of offences that States parties must criminalise, including bribery of national and foreign public officials, as well as embezzlement of a public official. It also includes acts carried out in support of corruption, illicit enrichment, obstruction of justice, trading in influence, and concealment, money laundering, and bribery in the private sector. The Convention uses a functional definition of “public official” and covers anyone who holds a legislative, administrative, executive, or judicial office, performs a public function, or provides a public service (as defined in the domestic law of a country).
[2] The Conference of the States Parties to the United Nations Convention against Corruption, Enhancing the use of beneficial ownership information to facilitate the identification, recovery and return of proceeds of crime (UN, 2021), https://www.unodc.org/unodc/en/corruption/COSP/session9-resolutions.html#Res.9-7.
[3] Article 11, Resolution adopted by the General Assembly on 2 June 2021 (United Nations General Assembly, 2021), page 5, https://documents-dds-ny.un.org/doc/UNDOC/GEN/N21/138/82/PDF/N2113882.pdf?OpenElement.
[4] FATF Recommendations 24 and 25, The FATF Recommendations, (FATF, updated 2023), page 22, https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatf-recommendations.html.