FATF Report to the G20 on Beneficial Ownership

FATF Report to the G20 on Beneficial Ownership

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7 October 2016 - The Financial Action Task Force (FATF) published its report to G20 Finance Ministers and Central Bank Governors which sets out its on-going work to improve the implementation of international standards on transparency, including on the availability and exchange of beneficial ownership information, to prevent the misuse of companies, trusts, and other corporate vehicles.

Improving transparency has been on the FATF agenda since 2003 when it first introduced international standards on beneficial ownership. Subsequent assessments of countries highlighted weaknesses in the way many countries had implemented these standards.  In 2012, the FATF strengthened the standards and addressed vulnerabilities such as bearer shares.  The FATF standards now set out comprehensive measures to ensure transparency to prevent the misuse of corporate vehicles, which are globally recognised and are also used in the peer review process of the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum)

The current cycle of FATF mutual evaluations places a greater emphasis on determining whether a country’s measures are effective in practice.  Recent revelations as well as a review of the first nine country reports in FATF’s current assessment cycle have highlighted that many countries still do not implement the beneficial ownership requirements effectively.

The challenge today is not the lack of international standards to improve transparency. The challenge lies in the effective implementation of these measures, which is why the FATF will work on the following proposals to improve countries’ implementation:

  • More emphasis on beneficial ownership in the follow-up processes to FATF mutual evaluations.
  • Clear and consistent recommendations to assessed countries on how to improve effective implementation of beneficial ownership requirements.
  • Enhanced cooperation between the FATF and the Global Forum to reinforce each other’s work to improve transparency in relation to beneficial ownership.

These proposals build on existing FATF work and reflect discussions with the Global Forum who issued their report to the G20 separately.

 

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 as the global standard-setter for measures to combat money laundering and terrorist financing, and other related threats to the integrity of the international financial system.  The FATF has developed the 40 Recommendations,  which are the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.  As well as setting standards, the FATF is responsible for regular assessments of how well members are implementing the Recommendations, and takes action against countries which are non-compliant.