Regional workshop: Promoting beneficial ownership transparency in Southeast Asia

Kuala Lumpur, Malaysia, 22-23 July 2019

A regional workshop organized by the Malaysia Anti-Corruption Commission (MACC), the United Nations Office on Drugs and Crime (UNODC) and the Stolen Asset Recovery Initiative (StAR), with support from the government of the United Kingdom.

Background

In recent years transparency of beneficial ownership of corporate vehicles is increasingly described and perceived as an essential element in the fight against corruption and as a tool for preventing money laundering and countering financing of terrorism. The United Nations Convention Against Corruption, article 12, mentions transparency regarding the identity of legal and natural persons involved in the establishment and management of corporate entities as necessary for prevention of corruption in the private sector. Article 52 of the UNCAC demands States parties to require financial institutions to verify the identity of customers and determine the identity of beneficial owners of funds deposited into high-value accounts.

    • At its sixth session, the Conference of the States Parties to the United Nations Convention against Corruption, adopted resolution 6/5, entitled “St. Petersburg statement on promoting public-private partnership in the prevention of and fight against corruption”, in which it called upon States parties to strengthen the involvement of the private sector in the fight against corruption and invited them, inter alia, to enhance transparency, including regarding beneficial ownership of private entities;
    • The revision of the Forty Recommendations of the Financial Action Task Force on Money Laundering in 2012 strengthened the requirements in order to support countries’ access to adequate, accurate and timely information on the beneficial ownership of legal persons and arrangements. FATF also requires financial institutions and designated non-financial businesses and professions (DNFBPs) to undertake additional steps when dealing with domestic politically exposed persons;
    • In the European Union the anti money-laundering directives contain relevant provisions on beneficial ownership, such as its definition, customer due diligence requirements and access to beneficial ownership information. The fifth directive, published in June 2018, grants access to the general public to beneficial ownership information of EU based companies, makes it an obligation to consult the beneficial ownership register when performing AML due diligence and obliges member states to create a list of national public offices and functions that qualify as politically exposed (PEP);
    • The G20 has also actively promoted its members’ engagement on transparency of beneficial ownership: the Leaders’ Declaration adopted at the G-20 summit in Hamburg, Germany, in 2017 underlined the G-20 countries’ commitment to advancing the implementation of beneficial ownership transparency of legal persons and legal arrangements.

Southeast Asian countries present several shortcomings with regard to transparency of beneficial ownership; the second cycle of UNCAC implementation review (covering prevention of corruption and asset recovery) as well as the Mutual Evaluations of the FATF recommendations highlights the lack of effective legal and institutional frameworks in this area. None of the countries in the region has been assessed as compliant with recommendations 24 of the FATF (on transparency and beneficial ownership of legal persons). Shortcomings include the lack of up to date and reliable central registries of legal persons, and when the registries exist, the lack of implementing regulations regarding the duty to notify the registry about changes to directors and shareholders. Indonesia is the only country in the region that so far has established a full-fledged registry of beneficial ownership. This mean that in practice countries in ASEAN have limited information over who owns and controls companies in their territories and do not keep up-to-date information on them. When information exist, verification capacity is weak and this undermines the ability of competent authorities to investigate suspicious cases, and the ability of banks and businesses to carry out proper due diligence.

Objectives:

The UNODC and the Malaysian Anti-corruption Commission will gather relevant stakeholders from Southeast Asian countries with a view to discuss the necessary legal and institutional frameworks for enhancing transparency of beneficial ownership. The roundtable will host a series of technical panels and discussions on the following issues:

  • Regulations and monitoring mechanisms for the establishment of information disclosure of beneficial ownership;
  • Enforcement and control systems to ensure the compliance with and accuracy of the disclosed and gathered information;
  • Preventing abuse of corporate vehicles and of the legal profession privilege;
  • The relevance of beneficial ownership for corruption investigations: identifying and uncovering beneficial owners


Participants:

Representatives of Anti-Corruption Authorities, law enforcement authorities, Market and financial Institutions Supervisory bodies, other relevant state officials and private sector representatives from Southeast Asian Countries.