In a significant development, the European Union (EU) plans stricter rules that would enable EU citizens to access registers of beneficial owners of companies and trusts without having to demonstrate a “legitimate interest” in the information. Currently, access is restricted to authorities and professionals such as journalists and lobbyists.
The new rules are amendments to the EU Anti–Money Laundering Directive agreed to by the EU Economic and Monetary Affairs and Civil Liberties committees and approved by the EU Parliament. The directive is aimed at curbing money laundering, tax evasion and terrorism financing activities.
The committees said public access would allow greater scrutiny of information by civil society, and contribute to preserving trust in the integrity of business transactions and of the financial system.
The scope of the Directive has also been expanded to cover trusts and other legal arrangements with a structure or functions similar to trusts. These were previously excluded from the Directive on privacy grounds. Trusts will now have to meet the full transparency requirements of firms, including the need to identify beneficial owners.
Registers become more common
The establishment of company beneficial ownership registers has been gathering pace around the globe since the Panama Papers and Bahamas leaks showed the financial details of hundreds of thousands of accounts.
In Australia, for example, the government recently released a Consultation Paper on the issue that seeks views on increasing the transparency of the beneficial ownership of companies for relevant authorities, to better assist these authorities to combat illicit activities.
Public access to such registers wasn’t suggested — the paper merely talks of “access for domestic and international ‘relevant authorities’ to beneficial ownership information.” The government is seeking feedback on what information needs to be collected in order to achieve this objective and how it should be collected, stored and kept up to date. It is also seeking feedback on the expected compliance costs for affected parties.
In the UK, Her Majesty’s Revenue & Customs has signed arrangements with 10 Overseas Territories and Crown Dependencies for sharing beneficial ownership information.