Beneficial Ownership

Purpose

To strengthen the Australian financial system against abuse by improving the information on the current business registers, and adding new information about the real people owning Australian businesses. To achieve this, we need to:

  • Modernise our existing company registers by making them interconnected, and ensuring the process and the data is presented in a clear, accessible and machine-readable way;
  • Allocate more resources to verify the data in the company register;
  • Introduce robust identifiers for individuals in the register, such as Director Identification Numbers;
  • Require all companies and trusts to disclose their beneficial owners to the company register;
  • Ensure this requirement covers all domestic entities and trusts, as well as foreign entities and trusts when they acquire property in Australia, or a significant stake in an Australian business;
  • Ensure the data in the register is publicly available in open-data format and implement the Beneficial Ownership Data Standard to ensure disclosure meets global standards;
  • Ensure that regulations clearly define beneficial owners, providing for the collection and verification of appropriate information and effectively sanctioning those who do not comply;
  • Prohibit nominee shareholders and the non-disclosure of beneficial owners; and
  • Prohibit non-financial institutions and professions, or so-called DNFBPs (such as real estate agents, accountants and lawyers), to proceed with transactions if they cannot identify the verified beneficial owner of their customer.

The Problem

70 per cent of Grand Corruption cases reviewed by the World Bank involved anonymous entities transferring funds. The United Nations Office on Drugs and Crime estimates between US$800 billion and US$2 trillion of illicit money is laundered every year, much of it through anonymous entities. It is the most common method for laundering dirty money worldwide.

Anonymous legal entities and secret relationships also hide conflicts of interest and obscure the level of influence a company or an individual might exert on a political decision. Transparency International’s research on mining deals found this to be a major flaw in the process of approving a mine in many countries.

For example – if a Minister for Mines granted a mining permit to a company in which he owns significant shares, could we reasonably assume this decision was made in the public’s best interest?

Australia and other G20 countries are major destinations for illicit financial flows from around the world. Australia, like other democracies, has an obligation to strengthen the integrity of our global financial system and stop the flow of dirty money. When countries step up to the task of closing the loopholes that allow criminals to prosper; and work together as an international community to establish rigorous standards for accountability, we will be able to combat corruption more effectively.

For TI Australia’s full statement of the problem and what Australian governments, business and other stakeholders need to do about it, download our position paper. Download Position Paper – Beneficial Ownership

Position Paper – April 2019