Andres Knobel ■ New publication on beneficial ownership transparency for companies listed on the stock exchange
This new paper describes why beneficial ownership regulations shouldn’t exempt companies listed on a stock exchange. Securities’ disclosure regulations are not adequate for identifying beneficial owners. In addition, definitions are subject to loopholes that affect identifying all relevant end-investors.
As assessed by the Tax Justice Network’s Financial Secrecy Index and summarised by our paper on the 2020 State of Play of Beneficial Ownership Registration, more than 81 jurisdictions have approved laws requiring beneficial ownership to be registered with a government authority. However, many legal frameworks (including the EU Anti-Money Laundering Directive) exempt listed companies from the scope of beneficial ownership registration, based on what we consider to be a wrong interpretation of the Financial Action Task Force recommendations.
The exemption benefitting listed companies is usually based on the fact that some other regulator, eg the securities or financial regulator or the stock exchange, is supposed to already have that information. However, this brief looks at securities regulations available in some countries, eg the US and the UK, showing that securities regulation doesn’t necessarily cover beneficial ownership information.
In the case of the US, the Securities Exchange Commission (SEC) has form 13D which is even called “beneficial ownership report”. However, it doesn’t necessarily refer to a natural person (which is the key element of the beneficial ownership concept according to the Financial Action Task Force and the OECD’s Global Forum).
Other countries, eg Ecuador, India and the Philippines do cover natural persons when requiring listed companies to identify their beneficial owners. Nevertheless, thresholds are too high to be able to identify all relevant investors.
This brief explains why we need a comprehensive approach to beneficial ownership registration to ensure that all legal vehicles, including those involved in passive investments, are subject to proper transparency. The brief also proposes measures to address the challenges, including our previous paper on the secrecy that surrounds listed companies and investment funds.
Download the brief here.
If you have comments or other proposals on how to address these secrecy risks, please contact Andres Knobel at [email protected]
A fund-amental improvement: IMF engagement on its anti-money laundering strategy
Como aumentar arrecadação sem aumentar impostos? The Tax Justice Network Portuguese podcast #48
Tax Justice Network Arabic podcast #64: تونس: المغسلة القبرصيّة في خدمة المتهرّبين من الضرائب
Quelle transparence pour la déclaration des bénéficiaires effectifs en Afrique? The Tax Justice Network French podcast #48
Malgré sa tourmente en Europe, la Transparence sur les bénéficiaires effectifs continue de s’améliorer en Afrique.
SWIFT: The next frontier in countering dirty money
Transparencia de beneficiarios finales en África y América Latina: Avances, pero aún queda más por hacer
Beneficial ownership transparency in Africa and Latin America: advances, but more to be done
Africa makes progress to end anonymous companies
The state of play of beneficial ownership registration in Africa 2022
13 March 2023