TI Australia has long been calling for beneficial ownership disclosure and strengthened anti-money laundering and counter terrorism financing (AML/CTF) legislation.
TI defines a beneficial owner as “the real person who ultimately owns, controls or benefits from a company or trust fund and the income it generates”. A beneficial ownership register collates information about the beneficial owner in a registry for storage and use by enforcement agencies, the private sector and, in some jurisdictions, the public. To date, a lack of political will has resulted in little progress in these areas in Australia. Recent global developments however are promising, as Australia faces pressure to keep up with global standards.
The Financial Action Task Force (FATF) is considering potential amendments to Recommendation 24 on the transparency and beneficial ownership of legal persons. TI Australia has put in a submission calling for a new global standard of beneficial ownership transparency, requiring all countries to record and disclose beneficial ownership information in a publicly accessible register.
The Australian Senate has recently referred the adequacy and efficacy of Australia’s AML/CTF regime to the Legal and Constitutional Affairs References Committee for inquiry. TIA has also put in a submission supporting the ‘Trache 2’ reforms, emphasising the importance of limiting criminals prospering through Australia’s businesses and professions. The ‘Tranche 2’ reforms involve bringing Designated Non-Financial Businesses and Professions (DNFBPs) – for example accountants, lawyers and real estate agents – in the AML/CTF regime, to better detect and prevent money laundering and terrorism financing, and other predicate crimes. This would bring Australia up to the same standard as New Zealand which already has obligations covering DNFBPs.
The beneficial ownership transparency agenda has gained significant momentum over the past decade. Our submission to the FATF consultation highlighted how an effective AML/CTF regime requires a robust and up-to-date understanding of how criminals might misuse domestic and/or foreign legal persons to commit crimes and launder money. We stressed that regulators have an important role to play to ensure that beneficial ownership registers have adequate, accurate and up-to-date information. The main counterargument against reporting beneficial information is that there may be a compliance burden on low-risk companies if they are required to identify and report on their beneficial owners. TI have demonstrated there is no evidence suggesting that there is an additional compliance burden for such companies. We also highlighted that countries need to ensure that legal and institutional frameworks enable the collection of adequate, accurate and up-to-date information in beneficial ownership registers. We believe the primary responsibility to verify beneficial ownership information should lie with the registry authority (or public body responsible for collecting beneficial ownership information). The registry authority should be mandated by law to independently verify the information provided by legal entities. It is also vital that adequate powers and resources are given to the authority to allow them to check the information provided by legal entities, request documents, carry out inspections and sanction non-compliance.
Although significant progress has been made at the international policy level to recognise the problems linked to beneficial ownership secrecy and weak AML/CTF legislation, progress is uneven, with many countries, including Australia, failing to meet their commitments.
TI Australia will continue to call for beneficial ownership disclosure and strengthened AML/CTF legislation in order to prevent Australia continuing as a major destination of the world’s dirty money.
