Using reliable identifiers for corporate vehicles in beneficial ownership data

Characteristics of reliable company identifiers

In its efforts to set international standards for beneficial ownership transparency (BOT) and combat money-laundering, the Financial Action Task Force (FATF), requires the use of “high integrity identifiers” for companies, i.e. identifiers deemed to be reliable:

“Tax identification number (TIN) is a common unique identifier, which may be used by countries. Countries may choose to use other high integrity identifiers with an equivalent level of identification instead of TIN to identify a particular legal person.

Non exhaustive examples of a unique identifier could be a VAT identification number, an income tax registration number, a national (company) register number or Legal Entity Identifier (LEI).” [6]

What these identifiers have in common is that they are (or should be) unique, persistent and resolvable. Below, a breakdown of each of these terms is provided.

Unique

As discussed above, a company name in a register may not be unique (and may be shortened, misstated or ambiguous). A reliable company identifier is unique to that company, within the given identifier scheme, and the company only has one identifier within that scheme. For example, CNC Engineering Company Limited has the identifier “RC-671630” within Nigeria’s Corporate Affairs Commission (CAC) company register. No other company has that identifier, and the company has no other identifier within that register.

Persistent

Still, registration numbers such as “RC-671630” issued by the CAC may not be reliably used if they are not issued permanently. For example, if companies had to re-register with the CAC every two years and were issued a new registration number each time, then the registration numbers will no longer be unique. CNC Engineering Company would have multiple registration numbers, only one of which was current.

A reliable company identifier should persist over time. “RC-671630” should be the only identifier referencing CNC Engineering Company historically and into the future, even if the company is dissolved. The historical dealings of a company may at some point need to be investigated. The need to check a company’s identity and details does not disappear with a company’s dissolution, acquisition or merger. For this reason, an identifier scheme can only be deemed reliable if company identifiers are retained as references to a single entity; are not deleted; and are not, under any circumstances, reissued to a different entity.

Resolvable

The final property that makes a company identifier reliable is that there is a mechanism for using it to check that the related company exists. If a French company were to report to French authorities that it was in a joint venture with CNC Engineering Company (i.e. “RC-671630”), the identifier is only useful if it can be used to track down and verify information related to CNC Engineering Company. This requires: firstly, that the CAC is disclosed as the issuing authority of the identifier; and, secondly, that the identifier can then be checked against CAC records. Fortunately, the CAC has a public search facility [7] on its website that can be used to check whether a company is indeed registered and active.

The use of a company’s identifier to obtain reliable and useful information about the company is often a process that can be automated by software systems. This relies on company registers or identifier schemes providing an application programming interface (API) to facilitate access to company information by interested parties.

Notes

[6] FATF (2023), Guidance on Beneficial Ownership of Legal Persons. Retrieved from: https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Guidance-Beneficial-Ownership-Legal-Persons.html.

[7] CAC (updated 2023), Nigerian Corporate Registry, Home page. Retrieved from: https://search.cac.gov.ng/home.

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