Defining and capturing data on the ownership and control of state-owned enterprises
Deciding whether to list individuals or role titles
Due to their structure and mandate, the ownership or control of SOEs frequently involves politically exposed persons (PEPs). The Financial Action Task Force (FATF), the international anti-money laundering standard setter, defines a PEP as “an individual who is or has been entrusted with a prominent function”, adding that “many PEPs hold positions that can be abused for the purpose of laundering illicit funds or other predicate offences such as corruption or bribery”. [20] PEPs often play roles that enable them to exert influence in ways which may not be immediately obvious or declarable under a country’s definition of beneficial ownership.
In some jurisdictions, such as the examples above, legislation confers influential roles on ministers or leading politicians due to their political position.
There are several reasons why public information on SOEs should list ministers and leading politicians as individuals rather than as their positions:
- A key principle behind beneficial ownership is that there is a natural person at the end of the control chain. Declaration of a position does not identify the individuals who hold or have held that position.
- Different individual ministers may have a range of declarable ownership interests beyond those bestowed upon them by their position, and these may be relevant for accountability and identifying potential conflicts of interest.
- Because individuals move between political positions, recording individuals rather than their roles makes it easier to form a picture of timelines of control.
- It is simpler to link individual data on the control of SOEs with other data on a beneficial ownership register.
- The data is easier to use and interpret, as it does not rely on assumptions of prior knowledge on the part of the user.
Implementers should consider the benefits of identifying individuals as opposed to their roles, as this strengthens the quality of beneficial ownership data and assists transparency.
Endnotes
[20] FATF (n.d.), FATF Guidance: Politically Exposed Persons (Recommendations 12 and 22). Retrieved from https://www.fatf-gafi.org/publications/fatfrecommendations/documents/peps-r12-r22.html.