The Financial Action Task Force (FATF) is considering proposals for amendments to Recommendation 24 and its Interpretive Note on the transparency and beneficial ownership of legal persons. Following a White Paper consultation in June-August 2021 on a number of key policy areas, the FATF has analysed the views received from various stakeholders in considering the potential amendments. These amendments seek to reinforce the Recommendation to ensure greater transparency about the beneficial ownership of legal persons, and take action to mitigate the risks. The draft text of proposals for amendments is available here. Proposed amendments are in redline.
The FATF is consulting all affected stakeholders before finalising these amendments. We primarily seek views from companies and other legal persons, financial institutions, designated non-financial businesses and professions (DNFBPs), and non-profit organisations, but also welcome contributions from other interested stakeholders. We would welcome views on specific proposals of the amendments to the text, as well as on the broader themes that they address, in particular on the areas of focus below:
- Multipronged approach to collection of Beneficial Ownership information
The requirement in paragraph 7 includes a compulsory company approach, a requirement for a public authority or body to hold beneficial ownership information (a beneficial ownership registry or another body) or an alternative mechanism, and the supplementary measures. Countries should decide, on the basis of risk, context and materiality, what form of registry or alternative mechanisms they will use to enable efficient access to information by competent authorities, and should document their decision. Do you agree with the approach set out in paragraph 7 of the Interpretive Note?
- Bearer Shares and Nominee arrangements
Should bearer shares and bearer share warrants without any traceability be subject to additional controls as set out in amendments to paragraph 14 of the Interpretive Note? Is the draft glossary definition sufficiently clear to avoid inadvertently applying excessive controls to traceable and legitimate uses of such instruments? If there remains undue controls, how should this be mitigated?
Should nominee arrangements be subject to the disclosure requirements as set out in amendments to paragraph 15 of the Interpretive Note? Will the proposed rules and the new glossary definitions create undue restrictions for institutional investors or other legitimate uses of such instruments, and if so, how should this be mitigated?
Are there other specific mechanisms that should be permitted, in addition to those proposed, which could ensure their transparency?
Should countries be required to assess the ML and TF risks associated with foreign-created legal persons and take appropriate steps to manage and mitigate them? What constitutes a sufficient link with the country?
Should a risk-based approach be applied to verification of beneficial ownership information?
Taking into account needs of competent authorities and other stakeholders, and concerns relating to privacy, security and other potential misuse of BO information, do you agree with the requirements on access to information as set out in paragraphs 12 and 13?
Please provide your response, including any drafting proposals to FATF.Publicconsultation@fatf-gafi.org with the subject-line “Comments of [author] on the draft Amendments to Recommendation 24”, by 3 December 2021 (18h00 CET).
This public consultation is now closed.
While submitting your response, please indicate the name of your organisation, the nature of your business, and your contact details. You may insert any specific drafting proposals directly in the attached text of the draft amendment text in tracked changes. We will use your contact information only for the purpose of this public consultation and for further engagement with you on this issue. The FATF will not share this information with third parties without your consent.
At this stage, the FATF has not approved the draft amendments to R.24. The FATF will consider the views received and revise the text of the R.24 for discussions at its February 2022 meetings.
We thank you for your kind contribution.
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