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According to the paper issued by the GCFFC, data must be structured, centrally collated, interoperable, and accessible to all the entities fighting financial crime.
The Global Coalition to Fight Financial Crime (GCFFC) has published a paper suggesting jurisdictions for fillingl the gaps that hinder access to highly usable and high quality data of beneficial ownership (BO).
As per the paper, beneficial ownership data must be structured, centralised, accessible to all entities fighting FinCrime, and interoperable.
It is essential that the beneficial ownership data is verified by entities and must have a high degree of fidelity about who owns the company. A system that relies on information without verification is not a practical choice.
“The use of anonymously owned legal entities – through shell companies, trusts, or other legal constructions – for hiding the proceeds of crime as well as its owners are well documented.”
The paper suggests that BO must be robustly and clearly defined in law. Moreover, sufficiently low thresholds must be used when ownership and control is disclosed. “However, international standards to date fall short of generating data that is useful and readily available for all law enforcement agencies, obliged entities and other actors fighting financial crime.”
The paper further adds that it is essential that the beneficial ownership data is verified by entities and the data must have a high degree of fidelity about who owns the company. A system that relies on information without verification is not a practical choice, it states.
The importance of beneficial ownership disclosures to comprehensively cover relevant types of legal entities and natural persons has also been highlighted, along with the provision of sufficient detail such that it allows users to utilize and understand the data.
The paper says, “Sufficient information should be collected to be able to unambiguously identify people, entities and arrangements, using clear identifiers for people, companies and trusts. Where BO is held indirectly through multiple legal entities, sufficient information should be published to understand full ownership chains.”
You can check the paper for more details here.
Suggested Read: Ultimate Beneficial Ownership (UBO)