FATF calls on G-20 to commit to beneficial ownership standards

The Financial Action Task Force has called on the governments of the 20 largest economies to issue a public commitment to meet FATF standards on beneficial ownership.

“The challenge today is not the lack of international standards to improve transparency. The challenge lies in the effective implementation of these measures,” the FATF said.

The anti-money laundering body published a report to G-20 finance ministers and central bank governors on Oct. 7 detailing its ongoing work to improve the implementation of international transparency standards.

In April, the G-20 called on the FATF and the Global Forum of Transparency and Exchange of Information for Tax Purposes to make proposals on how the availability and exchange of beneficial ownership information can be improved.

Both the G-20 and the FATF advocate that knowing the true owners of legal entities is important to prevent the misuse of companies, trusts and other corporate vehicles.

By meeting FATF standards on legal and beneficial ownership and ensuring they are properly enforced, the G-20 members would lead by example, the FATF said.

This would include fully implementing Recommendations 24 and 25 of the FATF standards; effectively monitoring gatekeepers, such as company formation agents, lawyers and trust and corporate service provide and their customer due diligence processes; eliminating barriers to information sharing like data protection and privacy concerns and facilitating the sharing of information at the domestic and international levels.

In a previous report to the G-20 in July, the FATF identified significant implementation challenges on beneficial ownership based on recent peer reviews. Only two of nine assessed FATF member countries since 2012 were found to have a substantial level of effectiveness in preventing the misuse of legal persons and legal arrangements.

Major improvements are required in the other seven countries which showed insufficient accuracy and accessibility of information related to company registrations. The weaknesses ranged from lax customer due diligence by service providers, a lack of sanctions for the failure to update information to other obstacles to data sharing such as data protection and privacy laws, which prevent authorities from getting timely access to beneficial ownership information.

The anti-money laundering body said it will put more emphasis on beneficial ownership in the follow-up processes to FATF mutual evaluations and provide clear recommendations to assessed countries on how to improve the effective implementation of beneficial ownership requirements.