Three takeaways from Kyrgyz Republic on implementing beneficial ownership transparency

The Kyrgyz Republic is one of over 50 countries who have committed, through the Extractive Industries Transparency Initiative (EITI) Standard, to publishing the beneficial owners of extractives license holders by 1 January 2020. Together these countries have the potential to create a new norm of beneficial ownership transparency in extractives, reducing the opportunities for corruption in this high value, high risk sector.

Open Ownership is working with EITI to support countries to publish beneficial ownership information as open data. This is the best way to ensure high quality, useful data that can be used to fight corruption and improve natural resource governance.

In February 2019, alongside the 42nd EITI International Board meeting in Kiev, Ukraine, we launched our report and recommendations for beneficial ownership transparency in the Kyrgyz Republic’s extractives sector. This is a milestone for our support to the Kyrgyz government through the Open Ownership Pilot Programme, but the findings are relevant to other countries – in EITI and beyond – which are working towards, or considering, implementing beneficial ownership regimes.

Here are our top three takeaways:

Think about the data early on

Across the countries we support, there is a tendency to think that policy comes first, and data comes later. This can really lessen the intended impact of beneficial ownership regimes. Our legal and technical recommendations to Kyrgyz Republic urge the government to consider key questions about the data early on. Who will use the register, and what do they need from it? What legal and regulatory changes are needed to ensure data is sufficiently detailed to meet these needs? Where are the gaps that help dishonest actors and how can we make it easier for honest actors to submit their information?

Answering these questions increases the chance that the legal and regulatory framework is put in place to enable useful data to be collected and published, and that technical systems are built to suitable specifications. This saves both time and money later on, and means the resulting data will be much more useful. The Beneficial Ownership Data Standard provides a framework for considering these issues.

Verification is important

Second, verification really matters. As existing registers such in the UK and Ukraine have highlighted, there is a clear need for authorities to verify the data that is submitted. This reduces the opportunity to submit false or erroneous information, and increases both trust in, and usefulness of, the data in the register. In Kyrgyz Republic, whilst we found good support for conducting basic checks on documents submitted, the agency responsible for the register lacks a mandate to investigate suspicious submissions, and there is not currently an agency that is empowered to look at the beneficial ownership data and identify suspicious patterns and red flags. This is necessary if sanctions for submitting false information are to act as an effective deterrent.

Coordinate and collaborate

Third, we highlight the need for cross government coordination throughout the design and implementation of a beneficial ownership regime. For example, by working in partnership across government agencies, implementing agencies can explore how to verify beneficial ownership data by electronically linking it with other government datasets, and better understand how other government agencies could make use of beneficial ownership data. Cross government collaboration is also needed to resolve issues such as establishing mandate and responsibility to investigate suspicious submissions.

Next steps

Whether a country is implementing a central beneficial ownership register, or an extractives specific register such as in Kyrgyz Republic, our report can help identify solutions to common issues, and prompt further reflection on the benefits of moving towards open data publication – where structured data is freely available to the public.

As EITI countries work to meet the 2020 January deadline to implement beneficial ownership disclosure for their extractives sectors, there is a real opportunity to establish open data registers as best practice. We’re excited to take forward our work with EITI at a time when the EITI Standard is being updated and strengthened, and we will continue to support countries implementing the EITI beneficial ownership requirement.