ACAMS Today Magazine (September-November 2017) Vol. 16 No. 4 | Page 74

AML POLICY
allows the government to freeze the U . K . assets , including property , of international human rights violators , even if the offense was committed overseas .
The U . S . property market is similarly flawed . Earlier this year , as part of its program to identify and track secret homebuyers hidden behind shell companies and opaque structures for money laundering , the U . S . Treasury Department ’ s Financial Crimes Enforcement Network ( FinCEN ) found that “ about 30 [ percent ] of the transactions covered by the Geographic Targeting Orders ( GTOs ) involve a beneficial owner or purchaser representative that is also the subject of a previous suspicious activity report . This corroborates FinCEN ’ s concerns about the use of shell companies to buy luxury real estate in ‘ all-cash ’ transactions .” 7
Political commitments
Social pressure has finally pushed politicians to tackle the problem of secrecy . Unable to mask or ignore the impact that the lack of transparency in legal arrangements have on society , participants at the 2013 G8 Summit endorsed the core principles on beneficial ownership and published action plans setting out steps they will take to enhance transparency . In November 2014 , G20 leaders adopted a policy document containing 10 principles intended to improve the transparency of beneficial ownership of companies and trusts —“ G20 High- Level Principles on Beneficial Ownership Transparency .” In the document , the group stated : “ We need better cooperation between government agencies , as well as greater transparency , particularly on the beneficial ownership of corporations , trusts , foundations and other legal arrangements . We need to ensure that beneficial owners are identified and that access to information on beneficial owners and international exchange of this information can be further improved .” 8 In June 2017 , in Hamburg , the group again expressed the will for effective implementation of the international standards of transparency and UBO , welcoming the work done by FATF and the Global Forum on Transparency and Exchange of Information for Tax Purposes in this regard . The Group praised the “ major progress ” in the fight against tax evasion and tax avoidance , as reported by the Organisation for Economic Cooperation and Development in the July 2017 Report . 9 The development in the Base Erosion and Profit Shifting ( BEPS ) package implementation and first automatic exchanges of financial account information ( AEOI ), scheduled to take place in September 2017 , were presented as the Group ’ s recent achievements . However , in terms of the accessibility of the beneficial ownership information itself , not much has been presented in the G20 Hamburg Action Plan or the Leaders ’ Declaration , but further reports on the progress were requested .
As important as high-level political commitments are , progress in implementing changes at the national level has been unimpressive . Regulatory and legislative pressure to identify the UBO as part of AML and ABC regimes is growing . For example , regulators have taken more industries into their purview . However , governments have not made much real effort to make the information available .
Available information in the EU and the U . S .
In the EU , the Fourth AML Directive requires member states to introduce registrars of the beneficial owners of companies . Yet in June 2017 ( the implementation deadline ) only a handful of member states had functioning registrars . Most registrars were hidden by a paywall or simply unavailable to the public , with data protection and privacy laws cited to justify restricted access . For example , the U . K . beneficial ownership registrar (“ People with Significant Control Registrar ”) opened in 2016 , but excluded trusts from the requirement to file ownership information . Only a year later , Scottish Limited Partnerships ( SLPs ), which form two-thirds of all the opaque corporate entities in the U . K ., have been covered by stricter disclosure rules . The registrar of trusts ’ beneficiaries is still to be created .
Where registrars did become available in Europe , the quality of data ( often collected but not verified ) was widely criticized by industry experts . This further illustrates that European countries still have a long way to go to make a real change . The beneficial ownership data that is collected must be of better quality , accessible without restrictions and encompassing of more legal forms , including trusts . Only then will European legal entities become unattractive to financial criminals .
The U . S . is only now attending to the problem . The International Monetary Fund strongly criticized the U . S . for failing to address the lack of transparency of American corporations and trusts , and published clear and strong recommendation for U . S . authorities to “ ensure that accurate beneficial ownership information of U . S . corporations and trusts … is collected and maintained by either registries of corporations and trusts … and requiring all FIs and DNFBPs , in particular trust and company service providers ( TCSPs ) including lawyers and accountants providing such services , to identify the beneficial owners of
7
“ FinCEN Renews Real Estate ‘ Geographic Targeting Orders ’ to Identify High-End Cash Buyers in Six Major Metropolitan Areas ,” FinCEN , February 23 , 2017 , https :// www . fincen . gov / news / news-releases / fincen-renews-real-estate-geographic-targeting-orders-identify-high-end-cash
8
“ G20 High-Level Principles on Beneficial Ownership Transparency ,” G20 , 2014 , http :// www . g20 . utoronto . ca / 2014 / g20 _ high-level _ principles _ beneficial _ ownership _ transparency . pdf
9
“ OECD Secretary-General Report to G20 Leaders ,” G20 , July 2017 , http :// www . oecd . org / tax / oecd-secretary-general-tax-report-g20-leaders-july-2017 . pdf
74 ACAMS TODAY | SEPTEMBER – NOVEMBER 2017 | ACAMS . ORG | ACAMSTODAY . ORG