Unnecessarily complex corporate structures remain one of the most effective ways for criminals to hide illicit activities and proceeds. Hence, identifying companies’ beneficial owners is absolutely essential to the fight against money laundering.
As part of its on-going efforts in this area, the Financial Action Task Force (FATF) is currently considering potential amendments to the international standard on beneficial ownership of legal persons.
At the centre of the revision is Recommendation 24 on the transparency and beneficial ownership (BO) of legal persons. In particular, the international watchdog is proposing potential changes around:
- Risk-based approach for foreign legal persons
To limit the use of cross-border ownership structures to conceal beneficial ownership, FATF is considering whether countries should apply measures to understand and mitigate the risk posed by different types of legal persons not only at a local level but also for certain foreign-created legal persons.
- Multipronged approach to collection of Beneficial Ownership information
FATF is also evaluating countries’ experience in establishing and operating beneficial ownership registries to identify what core elements should be included in a multi-pronged approach.
- Adequate, accurate, and up-to-date information
Thirdly, the Task Force is considering how to clarify and standardise countries’ timely access to adequate, accurate and up-to-date information on beneficial owner’s identity and means of ownership, to be verified using reliable documents or other methods, on a risk-sensitive basis.
- Access to information
FATF is looking for input on who should have access to beneficial ownership information, whether held by a registry or not, and how countries can effectively protect citizens’ privacy.
- Bearer Shares and Nominee arrangements
Finally, possible measures to strengthen controls on bearer shares and nominees are under consideration to prevent their use to conceal the beneficial owners of legal persons. FATF is also evaluating whether to require nominee directors and shareholders to proactively declare their status and (for non-regulated nominees) their nominator to the company and to a registry or financial institution.
The FATF has now opened a consultation on its proposed amendments. Participants should submit their comments and suggestions via email to FATF.Publicconsultation@fatf-gafi.org by 20 August 2021 (18h00 CET).
Click here to access the FATF consultation white paper in full.
If you’re interested in optimising your overall approach to UBO identification in line with international AML standards, we’d love to help. Know Your Customer’s award-winning RegTech solutions:
- Connect to official company registries in real-time from one centralised platform.
- Retrieve official company documents and automatically extract key shareholder information.
- Build intuitive charts of complex ownership structures across jurisdictions, identifying beneficial owners automatically.
We would love to show you what our technolgy can do for your business. Please contact us to get a live demo of our best-in-class digital solutions.
Last updated on May 9th, 2023 at 08:33 pm