Sufficiently detailed beneficial ownership information
Gathering detailed information
Each person or legal vehicle included in a BO declaration has characteristics or properties called attributes, as do the ownership and control interests that form the relationships between them. The information in BO registers is organised by these different attributes, such as names, dates of birth, identification numbers, types of ownership interests, etc. Combined, these make up the level of detail in a particular register. The categories of attributes that are collected through the disclosure process are referred to as information (or data) fields.
Declarations have sufficient detail when the registrar can achieve its main objectives for processing BO information in the register:
- identifying the individuals and legal vehicles in a declaration;
- understanding the ownership and control relationships between them; and
- ensuring the data is auditable and usable.
Considerations for how to achieve each of these objectives are detailed below.
One of the key starting points for the design of a BO disclosure process is taking stock of what relevant information is already available, especially in other government databases. Then, it is important to assess the feasibility of gathering and using this information to achieve the registrar’s objectives. What is sufficient in any given jurisdiction is often a function of how developed and open the digital public infrastructure for legal entity and individual identification is.
Governments often hold some information on individuals and legal vehicles that are subject to BO disclosure, and registrars will typically collect or retrieve more information than is made available to most end-users to carry out its core objectives for processing BO information. Registrars commonly have two main approaches for gathering information to complete declarations held in a BO register. The first is to retrieve it from existing sources such as an address, company, or taxpayer register. The second is to collect it directly from individuals at the point of filing a declaration. A registrar will typically use a combination of both methods.
A stock-taking and feasibility assessment can be achieved through data and systems-mapping, and requires interagency coordination across relevant government agencies. [3] The assessment should be performed with realistic sensitivity to the level of digitalisation in government agencies, which can vary significantly between and within jurisdictions. The process of gathering information should ultimately complement existing systems and, where possible, make use of available sources.
It should also consider which approach will be best suited to producing BO data that is well structured and highly usable. Structured data is highly organised according to a predefined model. [4] Gathering, storing, and making BO information available as structured data improves its functionality and the ease of connecting it with other sources. It reduces the cost of producing, using, and maintaining the information, and has a greater chance of meeting BOT policy goals.
Finally, user research with local stakeholders – including those using the system to make declarations, end-users of the data, and register administrators – should take place early and be repeated again at various decision-making and iteration points that affect the design of the BO register and its data-gathering approach. [5] Reviews and consultations with users are part of the wider BOT implementation journey. These should start before developing or amending legislation, policy aims, and disclosure requirements.
Retrieving information from existing sources
A registrar may retrieve information that is held in data sources outside the BO register with the aim of populating information fields in a BO declaration or verifying information that it collects directly through a BO declaration. Data verification is the combination of checks and processes that increase the level of assurance users have in the accuracy of the information, and is discussed in more detail below. In some cases, these aims can be simultaneously achieved.
In highly digitised contexts, retrieving information automatically from other government sources in real time may be technically feasible. In these cases, pre-populating information fields in digital declaration forms is preferable because it helps reduce redundancy across data sources, minimises accidental errors, and helps with consolidating information collected by different government sources. It also reduces the burden of compliance, as it can be challenging for the person submitting a declaration to obtain complete information, for example, to fill in all required identification fields for each beneficial owner. This means that, if possible, a digital form should be used to link directly to other systems and automatically draw information from them. In other cases, data can be retrieved post-submission to complete or verify a BO declaration.
For example, some jurisdictions have national identification (ID) numbers. These numbers are often associated with other information held by the government about a national or resident of a jurisdiction, such as an address or date of birth. Therefore, when a registrar collects a national ID number as part of its BO declaration process, it can use it to retrieve this information about the individual from other government databases. This removes the need for the same information to be directly collected from them again in the BO disclosure process. At the same time, the collection of this ID number is a form of verification because it is a unique identifier with a known provenance from a reliable government source. Digital ID numbers are especially effective for connecting information across government sources (Box 1).
Box 1. Using digital ID to complete and verify beneficial ownership information
In Denmark, the registration of companies and submission of BO declarations makes use of a government digital ID called MitID to verify the identity of both those making a declaration and beneficial owners. Because users can only get a MitID by scanning their ID and their face, or through an in-person appointment, their identities are already verified once they have a MitID. Those making the BO declaration need to use their own MitID to complete a declaration. They also need to provide each beneficial owner’s social security number. An individual’s social security number, MitID, and registered address are all connected, reducing the likelihood that there will be errors in the information held about them. Automatic cross-checks are also carried out using other relevant information the government holds, for example, detecting if a person is recorded as being deceased, missing, a minor, or without a registered residential address. [6]
The right approach may be different depending on the information fields and context-specific factors, such as data-sharing agreements, security protocols, technical systems, and data governance policies. [7] For each field, a registrar also needs to consider whether it will duplicate and store information collected from other databases as part of a registered BO declaration, or establish systems that allow the information to be retrieved as needed, for example, via an application programming interface (API), and consolidate the changes.
A BO register is in effect a ledger of information that builds up over time, and historical changes often hold significance for data users, such as law enforcement. [8] Therefore, for most data fields, it is often preferable to store a copy of the information retrieved at the time a declaration was made as part of the official register. Changes that do not trigger an obligation to submit a new declaration (such as a change of address) can then be captured periodically, for example, through annual filings.
On the other hand, data retrieval can also be a way of cross-checking information against what is held by other government agencies as a form of verification. For example, where digital IDs are not used, collecting a certified copy of a national ID document in addition to the ID number can make it possible to cross-check another government database, ensuring it matches the declaration (e.g. the same full name, address, etc.). Where forms are designed to minimise accidental errors, discrepancies can be a red flag. Practical considerations like the accessibility, as well as the level of confidence in the completeness, accuracy, or accessibility of a particular government data source, are also factors.
In using information from other sources to verify a declaration, registrars will need to establish business processes to resolve discrepancies and consolidate information held by the government. For example, if the register finds during verification checks that the address supplied for a domestic company that is the subject of a BO declaration does not match what is held in the company register, the registrar will need to determine whom it alerts of this discrepancy (e.g. the reporting company, the person submitting the declaration on its behalf, or the company registrar if it is a different authority); how to resolve it such that information held by government is consistent; and when to treat this type of discrepancy as a red flag.
Directly collecting information
Certain information has to be collected directly by the registrar when it cannot be reliably retrieved from another source. For example, information about ownership and control interests a beneficial owner holds in a legal vehicle will need to be collected rather than retrieved in most cases. Some jurisdictions may choose to retrieve existing information or exempt individuals whose beneficial ownership is held solely on the basis of shareholding if adequate and up-to-date identifying information is reliably recorded about them in a shareholder register, but interests such as substantive control will need to be directly declared for the foreseeable future.
Similarly, supporting documentation may be required where collected information cannot be cross-checked with another source, for example this is often the case for information about non-residents, such as foreign passport numbers. However, this should be avoided in order to minimise the compliance burden. Box 2 offers examples of types of documentation that can be collected to increase the level of assurance in the declared interest a beneficial owner holds in a legal vehicle. Collecting information on interests and verifying identity are further discussed below.
Collecting information for a BO declaration typically involves the use of a form. Digital webforms allow for better onward handling of data and a wider range of automated processes, as well as the retrieval of information to pre-populate certain fields. However, in some jurisdictions, factors like the rate of computer access, digital literacy, or digitisation of related systems might make other modes of collection like paper, spreadsheet, or PDF forms a more feasible option. [9] Alternative options for submitted information may also need to be available alongside a webform in highly digitalised contexts to ensure accessibility. [10] The Annex offers examples of fields that could be collected in a well-designed form.
Box 2. Supporting documents to verify interests in the United Kingdom’s Register of Overseas Entities
For submissions to the United Kingdom’s (UK) Register of Overseas Entities, the administrator checks “documents and information in either case obtained from a reliable source which is independent of the person whose identity is being verified” for non-UK entities. [11] In other words, supporting documentation is required to be provided by someone outside the foreign entity who is not a beneficial owner. This information is used to verify both the beneficial owner’s identity and the interests they hold. While this information is not collected by the registrar, it provides a good overview of the types of supporting documents and information that could be collected for verification purposes.
Documents to verify the condition to be a registrable beneficial owner is met as well as a statement as to why this is the case (e.g. means of ownership, control, or benefit) may include:
- an extract from a (public) company BO register in another jurisdiction;
- a statement from a lawyer qualified in the relevant jurisdiction (who is acting for the relevant person, or the overseas entity, rather than a beneficial owner);
- a (certified copy of a) share certificate, shareholder agreement, or statement of dividend as documentation of ownership held through a certain percentage of shares;
- an extract in a register of members or shareholders as documentation of ownership held through a certain percentage of shares;
- an extract of the entity’s constitution to determine the level of voting rights held;
- any applicable shareholders’ agreements or the like as documentation of the right to appoint the majority of the board of directors;
- a bank mandate, or other banking records, as documentation of the right to exercise control;
- contracts or agreements entered into on behalf of the overseas entity, or on behalf of a trust by a trustee, as documentation of the right to exercise control.
Footnotes
[3] For example, see: Organisation for Economic Co-operation and Development (OECD) and Inter-American Development Bank (IDB), Building Effective Beneficial Ownership Frameworks: A joint Global Forum and IDB Toolkit (OECD and IDB, 2021), 64, https://web-archive.oecd.org/tax/transparency/documents/effective-beneficial-ownership-frameworks-toolkit_en.pdf.
[4] Jack Lord and Tymon Kiepe, Structured and interoperable beneficial ownership data (Open Ownership, 2022), https://www.openownership.org/en/publications/structured-and-interoperable-beneficial-ownership-data/.
[5] Open Ownership, A guide to doing user research for beneficial ownership systems (Open Ownership, 2024), https://www.openownership.org/en/publications/a-guide-to-doing-user-research-for-beneficial-ownership-systems/.
[6] Julie Rialet, Use and impact of public beneficial ownership registers: Denmark (Open Ownership, 2023), https://www.openownership.org/en/publications/use-and-impact-of-public-beneficial-ownership-registers-denmark/.
[7] OECD, Going Digital Guide to Data Governance Policy Making (OECD, 2022), https://doi.org/10.1787/40d53904-en.
[8] Kadie Armstrong, Building an auditable record of beneficial ownership (Open Ownership, 2022), https://www.openownership.org/en/publications/building-an-auditable-record-of-beneficial-ownership/.
[9] Open Ownership, Beneficial ownership declaration forms: Guide for regulators and designers (Open Ownership, 2021), https://www.openownership.org/en/publications/beneficial-ownership-declaration-forms-guide-for-regulators-and-designers/.
[10] For example, many governments have introduced a legal requirement for public sector websites to meet the Web Content Accessibility Guidelines, see: Shawn Lawton Henry (ed.), “Web Content – WCAG 2”, Web Accessibility Initiative, updated 12 December 2024, https://www.w3.org/WAI/standards-guidelines/wcag/.
[11] See published guidance from the UK Government for a list of example sources: UK Government, Department for Business & Trade, “Annex A – Table of examples of documents and information in either case obtained from a reliable source which is independent of the person whose identity is being verified” in Guidance for the Registration of Overseas Entities on the UK Register of Overseas Entities: Technical guidance for registration and verification (UK Department for Business & Trade, 2024), 78, https://assets.publishing.service.gov.uk/media/67c17d6f68a61757838d20da/guidance-for-the-registration-of-overseas-entities-on-the-uk-register-of-overseas-entities.pdf.