In 2014, G20 countries adopted new High Level Principles on Beneficial Ownership Transparency in Brisbane, declaring "financial transparency, in particular the transparency of beneficial ownership of legal persons and arrangements a high priority."
The list of G20 countries include: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union
But just how good are these principles? Six take-home points were mentioned in this regard:
1. They were adopted. And that is good start; 2. More ambition needed; 3. We may see a shift towards cracking down on the people and sectors who help the corrupt enjoy lives of luxury; 4. Ambiguity could wreak havoc with identifying concrete actions; 5. It's good to see emphasis on international cooperation: 6. Momentum is growing. There is no going back.
Corruption is a major barrier to prosperity and equality; it erodes trust in government, affects economic and financial stability, threatens investment and curtails the basic rights of citizens.
In recent years, a multitude of corruption scandals emphasizes the evidence, witnessed by citizens, of widespread wrongdoing. In a context in which large-scale, cross-border corruption cases are becoming increasingly frequent, national level efforts to combat corruption often fall short.
International forums such as the G20 are essential to allow governments to coordinate their anti-corruption policies and contribute to the global fight against corruption.
In this sense, the Transparency International has welcomed the principles and tools developed by the G20 Anti-Corruption Working Group (ACWG), especially on asset recovery, beneficial ownership transparency, asset disclosure by public officials, open data and integrity in public procurement, as valuable starting points.
It is said to be urgent to fully put them into practice, and track whether these commitments are having the expected impact.
That is why, the TI has encouraged G20 countries to commit to developing national-level anti-corruption strategies that would draw G20 commitments into the national sphere, and could be complemented with additional anti-corruption priorities that are contextually driven, should contain specific objectives, time-lines and their results must be measured and made public.
Collective action to fight corruption must be a joint goal of governments, business and civil society, particularly regarding public procurement and infrastructure projects.
In this respect, national-level Anti-Corruption Strategies should be developed in partnership with both constituencies.
The TI also welcomed current ACWG initiative on state-owned enterprises as they have an increasingly significant impact in world economy and is fundamental to promoting a level-playing field and a culture of integrity.
When it comes to corruption in the public sector (including state-owned enterprises) the TI expects from G20 determined and effective enforcement of the rule of law.
It is also important in the opinion of TI to both encourage and acknowledge private sector compliance and integrity initiatives, including SMEs.
According to the TI, the corrupt don't like paper trails, they like secrecy. What better way to hide corrupt activity than with a secret company or trust as a front? One can anonymously open bank accounts, make transfers and launder dirty money. If the company is not registered in your name, it can't always be traced back to you.
This is known as a shell company and the person who actually benefits from and controls it - hidden behind layers of lawyers, accountants and nominee shareholders - is the beneficial owner.
Since the Panama Papers came out in 2016 the world has increasingly seen how shell companies are used either to operationalise corrupt deals or to launder stolen money.
TI's new report out on June 30, 2018 shows that some progress has been made since 2015, but that the pace of change is too slow - and the G20 countries are suffering from it.
The majority of G20 countries still does not know who owns and controls shell companies and trusts in their territories because of inadequate beneficial ownership legal frameworks.
Publicly available central registers - where the details of every beneficial owner of every company are stored - would help gather this information. Only six G20 countries now have central registers, and only the UK's is publicly available.
Even in cases where central registers exist, none of them requires registry authorities to verify information and in only three countries can information be verified in suspicious cases. As things stand, no G20 country is in a strong position to investigate suspicious cases of company ownership.
"The G20 is a group of leading economies, but it seems that their leadership is slow paced when it comes to seriously cracking down on the abuse of legal entities that are incorporated or operating in their own territories. They need to step up their efforts to create strong beneficial ownership legal frameworks and ensure that they enforce them," says Maggie Murphy, senior global advocacy manager, Transparency International.
The following are TI's key recommendations on beneficial ownership:
1. Governments establish a central register of beneficial ownership information and make it publicly available in open data format;
2. Governments resource and establish mechanisms to ensure that at least some verification of beneficial ownership information takes place, such as cross-checking the data against other government and tax databases, or conducting random inspections;
3. Financial institutions, lawyers, accountants, real estate agents and trusts should not be allowed to proceed with transactions if the beneficial owner of their customer cannot be identified;
4. Governments undertake national money laundering risk assessments on a regular basis;
5. Governments consider prohibiting nominee shareholders;
6. Governments require the registration of both domestic and foreign trusts operating in their country. Information on all parties to the trust (trustee, settler and beneficiaries) and the real individuals behind them should be recorded
An Open Letter to G20 Leaders coordinated by Transparency International and signed by 25 global civil society anti-corruption and religious leaders called on G20 leaders to adopt public registries of beneficial ownership.
The signatories included two Nobel Peace Prize Laureates, Archbishop Desmond Tutu and Tawakkol Karman, as well as the heads of Transparency International, Global Witness, Global Financial Integrity, Amnesty International, Oxfam, Care International and others.