Guide to implementing beneficial ownership transparency

Introduction

Beneficial ownership transparency (BOT) – that is, making more information about the individuals who own or control registered legal entities and arrangements available to those who can use it effectively – can help achieve a wide variety of policy goals. These include promoting investment, reducing due diligence costs, improving corporate accountability, and tackling corruption, tax evasion, and other financial crimes. A growing number of jurisdictions, more than 100 worldwide, have now made commitments to BOT. [1]

Moving from a commitment to the creation and implementation of an effective public register of companies’ beneficial owners requires a number of policy and technological reforms. International best practice on how to manage the implementation process is still emerging, and the lessons gained from one country may not always be as relevant to another context.

The gold standard for effective beneficial ownership (BO) disclosure is set out in the Open Ownership Principles for effective disclosure (OO Principles). They support governments to implement BOT in ways that maximise the policy impact of reform, and to assist international institutions, civil society, and private sector actors to understand and advocate for effective reforms. The OO Principles provide a framework for implementing comprehensive BOT reforms that generate actionable and usable data across the widest range of policy applications of BO data, as well as assessing and improving existing disclosure regimes. Effective disclosure needs high quality, reliable data to maximise usability for all potential users and to minimise loopholes. This implementation guide explains how to apply the OO Principles in practice; it is designed to help public officials identify and navigate the various legal, political, and technical issues that may arise when creating an impactful and effective public BO register.

Using this guide to support implementation

The content in this guide is structured around the five main stages of BOT implementation. As illustrated in the five hexagons above, this implementation journey follows a pattern similar to other information disclosure initiatives. [2] For each of these stages, Open Ownership (OO) has distilled the emerging good practices from its experience supporting implementation of BO registers in nearly 40 jurisdictions, as well as extensive desk research and conversations with a broad range of international stakeholders involved in BOT reform.

Throughout the guide, there are links to policy documents, reports, research, and tools that provide greater detail on how to adapt and apply these good practices in different implementation contexts.

Future steps for beneficial ownership registers

The content outlined in this guide has been intended to offer an understanding of all the issues and areas that will need to be tackled to deliver an effective public register of beneficial owners for a wide range of policy aims. Making the first BO data available to the public will be a major milestone, but publication is, of course, not an end in itself. For the data to have impact in the real world, it must be well used by stakeholders within and outside government. To design effective systems, it is important to understand the different ways in which government departments, businesses, and civil society will want to access and use the BO register to drive policy impact (see, for instance, Early impacts of public registers of beneficial ownership: Slovakia and United Kingdom). Some people will want to search for a particular record, whilst others will want to analyse many records at once. This means publishing the data in ways that both people and computers can read, understand, and use. Facilitating users to interact with the data and the register is crucial for increasing its impact and sustainability.

In addition, the disclosure regime and system should be updated regularly to ensure its continuing impact. Feedback from users and analysis of the data collected and published will help to gradually identify the strengths and weaknesses of the data. To make further improvements to the disclosure regime and register, it may be necessary to revisit earlier steps of the implementation journey and make tweaks to the underlying legislation or regulations. The OO Principles can be a framework for assessing the effectiveness of disclosure regimes and identifying areas for improvement (see this example for the UK), which should be conducted in consultation with the various stakeholders involved in BOT reforms. These reviews may lead to future changes, such as adjusting the definition to remove loopholes; lowering the disclosure threshold; expanding the range of entities to which disclosure requirements apply; altering the way the data is structured; and developing or enhancing verification procedures to improve its accuracy. By engaging in periodic reviews and improvements of the disclosure regime, the data will gradually become more useful. This will also be critical to achieving various policy objectives – such as building trust in the integrity of business transactions and of the financial system, or clamping down on money laundering, corruption, and tax evasion – that continue to motivate the creation of new BO registers across the globe.

For additional support on any aspect of this guide, implementers are invited to contact OO via the helpdesk facility or by email at [email protected].

Footnotes

[1] “Worldwide commitments and action”, OO, n.d., https://www.openownership.org/map/.

[2] To facilitate ease of navigation round the guide, these stages are presented as distinct areas for reform. In reality, as will be highlighted throughout, there will be significant crossover between these various categories, and reform areas need not necessarily be carried out sequentially.

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