Two years since the Panama Papers revealed use of anonymous shell companies to aid corruption and financial crime, governments in the world’s largest economies are still moving too slowly to ensure that citizens and law enforcement can find out who really owns companies operating within their borders, claims an anti-corruption pressure group.
According to a report by Transparency International (TI), 11 G20 countries still have “weak” or “average” legal frameworks for beneficial ownership transparency, despite adopting the G20 High-Level Principles on Beneficial Ownership Transparency in 2014. While some progress has been made since a similar assessment of 2015, notably in France, Germany, Italy and Brazil, all G20 countries have significant room for improvement, says TI.
Ten G20 countries and two G20 guest countries have “very weak” legal frameworks when it comes to providing law enforcement, tax authorities and financial intelligence units with access to any beneficial ownership information. The UK is the only G20 country to have set up a central register of beneficial ownership information that is publicly available. All other governments should follow suit, the campaign group says.
Maggie Murphy, senior global advocacy manager at Transparency International said: “Since the G20 Principles were adopted, we’ve seen more and more examples of how financial secrecy facilitates cross-border corruption. G20 countries should be leading the way to put a stop to this. While they drag their feet, countries such as Afghanistan, Ghana and Nigeria have been moving forward with plans for important mechanisms like public registers of beneficial ownership.”
Argentina, India, Russia, Saudi Arabia, South Africa and Turkey have not significantly improved their framework since 2015, according to TI. Canada and South Korea lag especially far behind as the only two countries of the 23 analysed that have a “weak” beneficial ownership transparency framework overall. Real estate agents in five G20 countries (Australia, Canada, China, South Korea and the United States) are not required by law to identify the beneficial owners of clients buying and selling property, despite recent major corruption scandals involving high-end real estate.
Delia Ferreira Rubio, chair of Transparency International, said, “The leaders of the G20 nations need to pick up the pace. Time and again, we’ve seen how it is anonymous shell companies that make the world of corruption go round. Simply making it possible to find out who ultimately owns a legal entity should be an obvious step towards preventing abuse of the financial system by the corrupt and other criminals. Are the G20 leading the pack, or are they happy to keep lagging behind?”
The full report, “G20 Leaders or Laggards?” is free to download.
