Measuring the economic impact of beneficial ownership transparency (full report)

Executive summary

Existing literature makes a strong case for beneficial ownership transparency (BOT), particularly when it comes to tackling issues such as money laundering and other illicit financial flows. To date, however, little research has sought to quantify the economic benefits of BOT reform. This is a potential obstacle for informed policy making.

Between January and March 2022, Oxford Insights and Lateral Economics conducted research for Open Ownership to help understand:

• What economic benefits can we expect from beneficial ownership transparency policies?
• How can we measure their extent?
• What has been done so far to measure the economic impact of BOT?
• How might quantitative evidence be used to advance BOT policymaking in the future?

The findings and recommendations in this report are not exhaustive. Instead, the report is an exploratory study which tackles some of the conceptual questions around measuring impact in this policy area. It also presents a landscape of potential options for quantifying impact in the future. We hope that this work will be a useful starting resource for governments, international organisations and civil society stakeholders with an interest in strengthening the economic case for BOT.

Key findings

1. Existing literature already builds a strong economic case for beneficial ownership transparency. There is a strong body of work which outlines the types of benefits we can expect from reform, which when combined with the economic evidence available, strongly implies that the economic benefits of BOT well outweigh its associated costs.
2. Research to date, however, has largely refrained from attempting to isolate the specific impacts of BOT, partly due to a lack of data, but also because of challenges surrounding benefit attribution.
3. In some jurisdictions, qualitatively identifying the benefits of BOT, combined with international pressure for reform, has successfully pushed forward policy change.
4. Nonetheless, we did hear that quantitative impact measurement remains particularly important to certain interest groups, particularly government treasuries as well as private sector businesses.
5. There are a number of survey-based, correlational and causational approaches that could be used to track the economic benefits of BOT reform. Approaches to measurement, however, always have trade-offs, often between how feasible it is to conduct an approach in the short-term, and its methodological robustness.
6. We found that estimations of particular benefit types are likely to be more robust and persuasive than large scale complex models. As such, this report is structured in terms of measuring specific benefits, and does not consider approaches for estimating the aggregate economic benefit of BOT, which are deemed unfeasible at present.
7. Currently, the most readily feasible approaches for measuring the value of beneficial ownership transparency interventions are survey-based. These methods could be employed both in jurisdictions where BOT has been implemented, and jurisdictions without a BOT regime in place.
8. Correlational and causal studies could also be possible in the longer term across countries with BOT regimes already in place. Findings generated by causal studies have the potential to be particularly robust, but these approaches would be both timely and costly to conduct.

Recommendations

In light of the research conducted in this report, we set forth the following key considerations for governments, international organisations and civil society stakeholders.

1. Whilst for many jurisdictions the available economic evidence already justifies the associated costs of beneficial ownership transparency, some of the methodologies outlined in this report would strengthen the understanding of the economic impacts of BOT in the short-term. Governments in particular should consider strategically employing the most cost-effective of these approaches to fill in the gaps in the existing evidence base.
2. Focusing on particular benefit types in relation to specific policy goals is likely to be the most practical approach to studying the economic benefits of BOT.
3. Governments conducting quantitative impact assessments in this space should publish their findings to help build the evidence base for the economic impact of BOT across jurisdictions.
4. In order to support more robust research to quantify the impacts of BOT in the future, and for their own monitoring and evaluation purposes, governments need to start tracking baseline data points now.
5. As the BOT policy area matures, further work should consider how specific design elements may lead to specific economic benefits. Future research is needed to understand the evidence not just for BOT in its broadest sense, but for the specific aspects of BOT implementation which amount to effective disclosure.
6. The Financial Action Task Force should play a role in supporting countries seeking to track the impact of BOT reform by publishing guidance around collecting and analysing statistical evidence for BOT.

Next page: Introduction