Andres Knobel ■ Complex Ownership Structures: Addressing the Risks for Beneficial Ownership Transparency

Tax justice reports
Tax justice reports

Complex Ownership Structures: Addressing the Risks for Beneficial Ownership Transparency

In order to understand complex structures and to develop ways to regulate them, in October of 2020 the Tax Justice Network together with other allies organised a closed roundtable with experts from international organisations, country authorities, civil society organisations, journalists, the private sector and academia. This report was prepared based on the feedback, discussion and presentations shared at the roundtable, with a focus on the secrecy risks (affecting beneficial ownership transparency) created by complex ownership structures.

The report attempts to address some of the comments at the roundtable which questioned whether there is a need to regulate complexity or whether there’s adequate evidence that complexity is actually abused. In response to these comments, the report includes evidence of cases where complex ownership structures were abused to engage in money laundering, corruption, sanction circumvention, tax abuse, and so on.

The report also considers the justification for complexity, questioning some of the arguments mentioned by participants at the roundtable and evaluating other factors that would determine what measures are needed.

The paper also offers a list of factors that could create complexity such as a high number of layers, presence of entities from secrecy jurisdictions in the ownership chain, and so on.

Acknowledging that this is a work in progress where discussions have just started, the report prescribes no specific policy to follow, but analyses the pros and cons of different measures and offers a list of actions that countries should consider.

  • Conduct exploratory research
  • Investigate outliers
  • Determine minimum complexity needs
  • Test measures within a sample
  • Adopt risk-neutralising conditions
  • Naming and shaming companies with complex structures
  • Simplification plans for big companies “too complex to fail”