BEFORE YOU GO...
Check how Shufti Pro can verify your customers within secondsRequest Demo
While addressing the Pandora Papers, the Paris-based global financial watchdog, FATF, has issued new beneficial ownership requirements.
The Financial Actions Task Force (FATF) has issued a statement on the Pandora Papers and pointed out the need to address the use of legal arrangements and shell companies to hide illicit profits and obscure beneficial ownership.
The watchdog notes that it introduced global standards to prevent the concealment of company information since 2003. More than 200 countries and territories have ensured to acquire information on companies formed or operating in their jurisdictions for identification and verification of beneficial ownership. However, FATF’s mutual evaluation reports indicate a lack of effective action.
“Out of more than 100 mutual evaluations, only one-third of countries have laws and regulations related to the transparency of legal persons and arrangements that comply with the FATF standard. Just 10 percent take effective measures to ensure the transparency of company and trust ownership,” says FATF.
FATF is now consulting on the amendments proposed on its beneficial ownership of legal persons and transparency standards to combat the illegal use of shell and front companies by perpetrators.
The amendments seek to reinforce Recommendation 24 and its Interpretive Note to ensure higher transparency regarding beneficial ownership of legal persons. The proposals follow a white paper for consultation published in June amid findings that countries are “still not doing enough” to ensure that updated beneficial ownership information is available.
The proposed changes include a requirement for organizations to obtain and hold adequate, accurate and updated information on beneficial ownership, cooperate with competent authorities to determine the beneficial owner, and cooperate with FIs and DNFBPs for up-to-date beneficial ownership requirements.
The FATF has also suggested countries to evaluate money laundering and terrorism financing risks associated with foreign-created legal persons and take all possible steps to mitigate them.