The Transparency International Report on corporate opacity in the G20 countriesEditorial
Spain has a solid legal framework to combat opaque companies, according to the recent Transparency International Report in which it analyzes the progress of the G20 countries in the fight against opaque companies, whose real beneficiaries remain in the shadows.
Transparency International presented the report "G20: Leaders or laggards? A review of the G20 promises to end opaque companies", in which they analyze the progress of these industrialized and emerging countries in their fight against the secrecy of corporate ownership. As the document reveals, Spain -a guest country within this bloc- has a quite strong legal framework to deal with these companies, which are constituted using tools to carry out corrupt businesses.
The report, in the writing of which Transparency International Spain collaborated, highlights the reasons why the country achieved a good evaluation. In the first place, there is a register of real ownership of the companies, which the authorities can consult in an open manner and which is aligned with the European Union regulations.
Accordingly, when there is a suspicious activity, notaries can verify that information -the study ensures that this activity is only possible in Spain, Argentina and Italy-. In addition to that, banks are required to provide data on account holders, even if they are known to be the final beneficiaries of some company.
Spain shares this positive result with France, Italy and the United Kingdom, although the report highlights that there is still some way to go.
For example, the country does not have a registry of Trusts, as required by the Fourth European Directive against Money Laundering. Another improvable aspect is that evaluations were made of money laundering risks, but the results were not published.
GLOBAL ANALYSIS: SLOW PROGRESS
In relation to the year 2015, the results in general terms have improved. On that occasion, Transparency International measured the implementation of the Final Beneficiary Principles, adopted in 2014, and has detected that 15 of the G20 countries have a weak or moderate legal framework to stop the existence and functioning of opaque companies.
This year, the number has reduced to 11: Canada, South Korea, Australia, China, India, Indonesia, Russia, Saudi Arabia, South Africa, Turkey, the United States and the Netherlands (as a guest country). "There is still considerable weakness in compliance with the principles," says the report.
The G20 countries are working to address this, but progress is quite slow.
One of the requirements is for the countries to have a register of real ownership or final beneficiaries of the companies. In six G20 countries there is this registry -Brazil, France, Germany, Italy, the United Kingdom and Spain as a guest country- but they still have certain weaknesses. In others, such as Canada and the United States, there are fragmented and incomplete databases.
Regardless of the existence of the registries, in nine G20 countries -Australia, Brazil, Canada, Germany, Indonesia, Russia, South Korea, Turkey and the United States- financial institutions can continue with the transactions, although the identity of the final beneficiaries are unknown. In eight countries, in addition, people are allowed to register as shareholders, without being required to disclose the identity of the real owner.
Weaknesses in the work regulations of some professionals were also found.
This is to say, in many countries, lawyers, auditors, real estate agents, among others, do not have the obligation to ask for information about the effective owners. This happens in nine countries: Argentina, Australia, Brazil, Canada, China, India, Japan, South Korea and the United States. On the other hand, in Indonesia and South Africa, new rules were established to extend the responsibilities against money laundering also to lawyers.
Transparency International recommendations:
Governments should create a central registry of final beneficiaries, which should be available to the public in open formats.
Governments have to provide resources and establish mechanisms to ensure that there is at least one verification of information from actual owners or actual owners. For example, that information is cross-checked with other governmental and tax databases, or random inspections are carried out.
Designated financial institutions and businesses and non-financial professions should prevent transactions from being made if it is not possible to identify the final beneficiary of their client.
Governments should carry out assessments of money laundering risks on a regular basis. This should include an analysis of the risks associated with legal entities and agreements, both national and foreign. Stakeholders, including obligated parties and civil society organisations, should be consulted. The results of these evaluations has to be published online.
Governments should consider the possibility of prohibiting nominated shareholders. If they are allowed, they should be required to refer to their status in the registry and be registered as nominees. They have to be accredited and submit to strict obligations against money laundering.
Governments have to demand the registration of national and foreign trusts that operate in their country. Information about the trust participants and the individuals who are really behind it has to be documented.