Charting New Waters: Strengthening Fisheries Governance through Beneficial Ownership Transparency
Benefits of Using Beneficial Ownership Information in Fisheries Governance
Effective fisheries tenure governance is critical to achieving key fisheries policy aims pursued by most countries: ensuring economic benefit is derived from fisheries while preventing overfishing and environmental degradation. It will also help countries achieve common secondary policy aims, such as ensuring fishing activity also has a positive social impact. BO information could make an important contribution to improving fisheries management by, among other things, enabling authorities to hold all actors in the sector to account for regulatory and legal infractions. There are numerous potential benefits to be gained from using BO data within the fisheries sector, which are outlined below. [20]
Improving the Licensing Process and Participation
A key aspect of fisheries tenure systems is the issuing and renewal of licenses, where parties wishing to engage in fishing operations must variously apply for and obtain authorization to fish and gain access to a fishing quota allocation. This generally requires the registration and licensing of fishing vessels, to which a license is often tied. It is during this process that authorities can seek to advance the aims of their fisheries policies by deciding to whom licenses to fish are granted. For example, a government may seek to protect domestic fishing operations by limiting the participation of foreign operators, or to improve standards by excluding any companies or individuals previously linked to IUU operations. Without screening who is behind the companies applying for licenses, however, it would be easy for non-qualifying applicants to circumvent these types of restrictions by, for example, incorporating a different company and applying for a new license. [21] As part of basic due diligence checks, licensing authorities often screen against vessel names or applicants that have a history of misconduct. [22] Expanding this approach to include beneficial owners could allow governments to check whether license applications involve individuals associated with previous wrongdoing, and can help ensure that those who have been involved in IUU fishing do not gain access to quotas and other benefits, such as subsidies.
In addition, as rights to fishing and quotas can be very valuable, they present a corruption risk. There are many documented cases of politically exposed persons (PEPs) using their influence to grant fishing rights, including to corporate vehicles in which they have a beneficial interest. In one study, 20 per cent of cases of IUU fishing were linked either to state-owned enterprises or PEPs. [23] The integration and use of BO information in the licensing due diligence process could help reveal these connections and raise red flags for potential corruption. Basic checks can include whether PEPs or their associates are beneficial owners, and checking whether these conflicts of interests have been declared as part of asset disclosure. [24] Where BO information is made more broadly available, this also allows non-governmental parties to exercise oversight and hold decision-makers to account.
Making information more widely available can also help improve broader access to fishing licenses. The lack of information on who owns fishing rights can be a key barrier to entry to the sector, and may require new entrants in search of buying or leasing licenses to rely on word of mouth to see who owns quotas. [25] Access to information is a key precondition to enable a quota market to function effectively. Helping new players enter the market and secure necessary loans to access capital can be a policy driver of broadly accessible BO registers for corporate vehicles. [26]
Detecting and Investigating Corruption and Other Crimes in the Fisheries Sector
Crimes in the fisheries sector fall into two broad categories: crimes in the fisheries value chain (e.g. tax crimes, human trafficking and forced labor), and crimes associated with the fisheries sector (e.g. smuggling firearms using fishing vessels). [27] These two categories of crimes often occur at the same time as IUU fishing, and all three categories can overlap. [28] A vessel, its owners and operators engaged in IUU fishing may also be involved in smuggling endangered species, falsifying export documentation and bribing officials to facilitate these offenses, along with laundering the proceeds. [29] In such cases, law enforcement agencies often focus on those who are operating and physically present on the vessel, in part because it is difficult to hold to account those who ultimately own or control it. The lack of information on vessel ownership often presents a dead end in investigations. [30]
Combating corruption, tax crimes and money laundering and its predicate offenses have been key policy drivers of BOT reforms for corporate vehicles. [31] How BO information is being used by financial investigative units (FIUs), law enforcement and non-governmental actors to detect and investigate these crimes has been extensively documented. [32]
As IUU fishing activity is often linked to transnational organized crime groups, established uses of BO information in tackling organized crime may also help tackle crimes in the fisheries sector. [33] Where these crimes overlap, as well as examples that rely on established ways in which BO information is used, are covered more extensively elsewhere. [34] BO information can also be used in the detection and investigation of tax crimes, including abuses of double taxation agreements, transfer mispricing, tax evasion and profit shifting, particularly where offshore corporate structures are used. [35] BO information of fishing licenses, quotas and vessels can help establish which individuals have benefited from fishing activities and may have tax liabilities as a result. It could also help enforce prohibitions on those convicted of corruption and other offenses from acquiring new licenses in the sector.
Improving Fisheries Policies through Better Monitoring, Evaluation and Oversight
Where information on who ultimately owns, controls and benefits from fishing rights is made available to parties outside of government, it can help further strengthen fisheries tenure policy. For example, widely available BO information can help any business engaged with the fisheries sector to conduct due diligence on its counterparts and ensure it is not making itself complicit in crimes in the fisheries sector. BO information can also help with risk management throughout the value chain. Making BO information available to investigative journalists and CSOs can also help bolster monitoring and oversight of the fisheries sector.
BO information can enable the monitoring and evaluation of fisheries policy, and inform better policymaking. Some governments, for example, aim to secure fishing communities’ livelihoods and food security by allocating licenses to coastal communities or their citizens, or charging higher prices for licenses to foreign operators. BO and associated corporate structure information would be able to help identify cases where domestic front companies or nominees are used to circumvent these measures. Where fisheries tenure systems have been liberalized, quota markets need to be guarded against oligopolization. Particularly where the issuing of licenses is limited and licenses can be bought, sold and leased, there is a risk that larger operators will crowd out smaller ones, which could be detrimental to the resilience of coastal communities. [36] Increased market concentration and the emergence of fewer, more-dominant fishing operators could improve efficiency, but other studies suggest it can also lead to near-absolute ownership of quotas in certain areas, which may result in inefficiencies and higher prices. [37] Operators may seek to disguise the size of their market share by using different corporate vehicles to hold quota shares, while BO information can identify links between these apparently separate entities.
Footnotes
[20] For a more detailed discussion of the issues raised in this report, see: Kiepe and Low, Using Beneficial Ownership in Fisheries Governance.
[21] In this way, many mining license holders in Nigeria avoided paying license fees. The Mining Cadastre was able to significantly increase its revenue by using BO information to identify individuals with outstanding fees who were applying for new licenses using different companies. See: Alanna Markle and Tymon Kiepe, Who benefits? How company ownership data is used to detect and prevent corruption (s.l.: Open Ownership, 2022), https://www.openownership.org/en/publications/who-benefits-how-company-ownership-data-is-used-to- detect-and-prevent-corruption/.
[22] South Australia, for example, maintains a list of persons disqualified from holding a license or authority to fish based on whether they have been found guilty of an offense. When a corporate vehicle is disquali- fied, the disqualification is also applied to each director. See: “Demerit points”, Department of Primary Industries and Regions, Government of South Australia, 2 May 2022, https://pir.sa.gov.au/primary_industry/commercial_fishing/licensing_and_registration/demerit_points.
[23] Brush, Strings Attached.
[24] For more information, see: “Asset Declarations”, Stolen Asset Recovery Initiative, n.d., https://star.worldbank.org/focus-area/asset-declarations.
[25] Canada House of Commons, “West Coast Fisheries”, 31.
[26] Christina Burridge, “BC Seafood Alliance Recommendations to the House of Commons Standing Committee on Fisheries and Oceans on the Regulation of West Coast Fisheries”, BC Seafood Alliance, February 2019, 3, https://www.ourcommons.ca/Content/Committee/421/FOPO/Brief/BR10362148/br-external/BCSeafoodAlliance-e.pdf; Canada House of Commons, “West Coast Fisheries”, 31.
[27] UNODC, UNODC Approach to Crimes in the Fisheries Sector.
[28] IUU fishing covers a range of activities, not all of which are crimes. See: “What is IUU fishing?”, FAO, n.d., https://www.fao.org/iuu-fishing/background/what-is-iuu-fishing/en/; The Pew Charitable Trusts, FAQ: Illegal, Unreported, and Unregulated Fishing (Philadelphia: The Pew Charitable Trusts, 2013), 2, https://www.pewtrusts.org/-/media/legacy/uploadedfiles/peg/publications/fact_sheet/iuufaqwebpdf.pdf.
[29] See, for example: INTERPOL Purple Notice, 9 September 2015, quoted in UNODC, Rotten Fish, 32.
[30] Daniels et al., Fishy networks.
[31] Predicate crimes for money laundering differ between jurisdictions. Some jurisdictions, such as the EU, include a list of specific crimes: European Union Law, “Directive (EU) 2018/1673 of the European Parliament and of the Council of 23 October 2018 on combating money laundering by criminal law”, Article 2, Official Journal of the European Union, EUR-Lex, 23 October 2018, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2018.284.01.0022.01.ENG. Other jurisdictions, such as the UK, include any criminal conduct as a predicate offense: UK Legislation, Proceeds of Crime Act 2002, Section 340, updated 26 October 2023, https://www.legislation.gov.uk/ukpga/2002/29/section/340.
[32] See, for example: Markle and Kiepe, Who benefits?
[33] UNODC, UNODC Approach to Crimes in the Fisheries Sector, 2; UNODC, Fisheries Crime, 4–5.
[34] See: UNODC, Stretching the Fishnet; OECD, Evading the Net.
[35] Emmanuel Mathias and Adrian Wardzynski, Leveraging Anti-money Laundering Measures to Improve Tax Compliance and Help Mobilize Domestic Revenues (Washington, DC: International Monetary Fund, 2023), https://www.imf.org/en/Publications/WP/Issues/2023/04/21/Leveraging-Anti-money-Laundering-Measures-to-Improve-Tax-Compliance-and-Help-Mobilize-532652; Peter Chowla and Patricia Ann Brown, Beneficial ownership information: Supporting fair taxation and financial integrity (New York City: United Nations Department of Economic and Social Affairs, 2023), https://desapublications.un.org/file/18428/download; OECD, Evading the Net, 12; FiTI, Fishing in the dark.
[36] Silver and Stoll, “How do commercial fishing licences relate to access?”.
[37] Low Impact Fisheries of Europe (LIFE), Fishy Business: Fish POs in the EU (Bristol: LIFE, 2017), https://lifeplatform.eu/wp-content/uploads/2017/12/Fishy-Business-in-the-EU.pdf.
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