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Ukraine

Beneficial Ownership Registry (UA0076)

Overview

At-a-Glance

Action Plan: Ukraine Action Plan 2018-2020

Action Plan Cycle: 2018

Status: Active

Institutions

Lead Institution: MoJ MoF State Fiscal Service State Service of Financial Monitoring National Agency of Ukraine for Finding, Tracing and Management of Assets Derived from Corruption and Other Crimes State e-Government Agency

Support Institution(s): Transparency International Ukraine, Government-Civic Initiative “Together against Corruption,” International Renaissance Foundation, Anti-Corruption Action Centre, other CSOs and international organizations (upon their consent)

Policy Areas

Anti-Corruption, Beneficial Ownership, E-Government, Private Sector

IRM Review

IRM Report: Ukraine Design Report 2018-2020

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information , Technology

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

Launching a mechanism to verify information on final beneficiaries Nowadays, the effective law requests the legal entities to identify its final beneficiary, regularly update and store information about him/her and provide it to the state registrar in cases and scope stipulated by law. Information on final beneficiaries is accessible in the Unified State Register of Legal Entities, Private Entrepreneurs and 13 NGOs (hereinafter – the Register), but it is incomplete and displayed in a non-structured way there. Moreover, Ukraine lacks a mechanism to verify information from the Register. Namely, it does not specify an authority that is authorized to conduct such verifications as well as reasons therefor. On 22 May 2017, the MoJ, State e-Government Agency, Transparency International Ukraine and OрenOwnershiр Consortium signed the Memorandum of Understanding that identifies joint action on transferring information on beneficiary ownership from the Register to the Global Beneficial Ownership Register. Actions Responsible Timeframe Partners Indicator 1. Updating software of the Register so that it separately displays information on a founder and a final beneficiary owner (controller) of a legal entity MoJ MoF State Fiscal Service State Service of Financial Monitoring National Agency of Ukraine for Finding, Tracing and Management of Assets Derived from Corruption and Other Crimes State e-Government Agency December 2018 – March 2019 Transparency International Ukraine, Government-Civic Initiative “Together against Corruption,” International Renaissance Foundation, Anti-Corruption Action Centre, other CSOs and international organizations (upon their consent) Data on beneficiary owners of legal entities in the Unified State Register are adapted for integration to the Global Beneficial Ownership Register 2. Drafting proposals on a mechanism to verify information on beneficiary owners from the Register -//- December 2018 – December 2019 -//- A concept of a mechanism to verify information on beneficiary owners from the Register is developed Expected results of this activity are transferring information from the Register to the Global Beneficial Ownership Register; introducing verification of information on final beneficiary owners; preventing and countering laundering of the proceeds of crime, financing terrorism and proliferation of weapons of mass destruction

IRM Midterm Status Summary

7. Launch the mechanism of verifying final beneficiaries

Language of the commitment as it appears in the action plan: Launching a mechanism to verify information on final beneficiaries [58]

Nowadays, the effective law requests the legal entities to identify its final beneficiary, regularly update and store information about him/her and provide it to the state registrar in cases and scope stipulated by law. Information on final beneficiaries is accessible in the Unified State Register of Legal Entities, Private Entrepreneurs and NGOs (hereinafter – the Register), but it is incomplete and displayed in a non-structured way there. Moreover, Ukraine lacks a mechanism to verify information from the Register. Namely, it does not specify an authority that is authorized to conduct such verifications as well as reasons therefor.

On 22 May 2017, the MoJ, State e-Government Agency, Transparency International Ukraine and OрenOwnershiр Consortium signed the Memorandum of Understanding that identifies joint action on transferring information on beneficiary ownership from the Register to the Global Beneficial Ownership Register.

Milestones:

  1. Updating software of the Register so that it separately displays information on a founder and a final beneficiary owner (controller) of a legal entity
  2. Drafting proposals on a mechanism to verify information on beneficiary owners from the Register

Start Date: December 2018

End Date: December 2019

Context and objectives

Information on the ultimate beneficial owners of companies in Ukraine is disclosed in the Unified State Register of Legal Entities, Private Entrepreneurs and NGOs (Register). [59] However, this Register has several flaws, including incomplete information displayed in non-structured ways, [60] irregular updating, [61] insufficient and questionable information, [62] and no mechanism to verify insufficient and questionable information. [63] The law imposes fines for not submitting information to the Register, but few fines have been applied in practice. Also, there are no sanctions for submitting incorrect information to the Register.

Some civil society representatives believe that the existing flaws allow the concealment of ultimate beneficial owners. According to an interviewed representative from the Anticorruption Action Centre (ANTAC), [64] some Ukrainian companies have intentionally disguised their real owners. [65] Many companies often submit incorrect information about their beneficial owners or do not submit any information at all. [66]

This commitment aims to launch a mechanism to verify the accuracy of the Register’s beneficial ownership information by updating its software. The linked performance indicators are specific enough to verify, and because this initiative implies a more precise disclosure of data on registered entities online, it is relevant to OGP values of access to information and technology and innovation.

The verification of information on the Register continues from Commitment 5 from the previous action plan (2016−2018). While some progress was made, including the passage of a regulation to comply with global open data standards, the software to search and display relations between ultimate beneficial owners was not developed. [67] The Ministry of Justice (MoJ) expects this current commitment will result in accurate and up-to-date information on ultimate beneficial owners in the updated Register, [68] which could help prevent and counter laundering of criminal proceeds. [69] If fully implemented, this commitment could have a transformative impact in allowing accuracy verification of companies’ ultimate beneficial owners included in the register.

Next steps

Experts from civil society advise the MoJ to introduce unique identifiers for individuals and to establish annual mandatory updates of the Register data. [70]

For effective verification, multiple mechanisms could be used to verify information on beneficial owners from the Register. These include automatic checks against risk-indicators, feedback from banks, and cross-checks with other registries. The Cabinet of Ministers could prepare a draft regulation specifying agencies and their roles for verification.

[59] “The United States Register of Legal Entities, Private Entrepreneurs and NGOs” (Open Data Portal, 12 Dec. 2019), https://data.gov.ua/dataset/1c7f3815-3259-45e0-bdf1-64dca07ddc10.
[60] “The Cabinet of Ministers of Ukraine. Decree on 18 December 2018 #1088-p” on The Government Portal, The Unified Web-portal of Executive Authorities of Ukraine (Cabinet of Ministers of Ukraine Secretariat, 18 Dec. 2018), https://www.kmu.gov.ua/storage/app/media/17-civik-2018/partnerstvo/plan_2018%20-%202020.pdf.
[61] Oleksiy Orlovsky, International Renaissance Foundation (IRF), interview by IRM researcher, 6 Mar. 2019.
[62] “Beneficial Owner: What is Inside Ukrainian Business Register?” Open Society Foundations (Liga.net, accessed: Dec. 2019) https://project.liga.net/projects/beneficiar/index_en.html.
[63] “Beneficial Owner: What is Inside Ukrainian Business Register?” Open Society Foundations (Liga.net, accessed: Dec. 2019) https://project.liga.net/projects/beneficiar/index_en.html
[64] Tetiana Shevchuk (ANTAC), interview by IRM researcher, 12 Mar. 2019.
[65] Ibid.
[66] Darya Kaleniuk and Tetiana Shevchuk, “Why it is profitable in Ukraine to lie to the state about the beneficial owner” (Zn,ua, 8 Dec. 2018), https://dt.ua/internal/ivan-ivanov-chi-vse-zh-taki-realni-kontroleri-kompaniy-296445_.html.
[67] “The Regulation of the Cabinet of Ministers of Ukraine on 18 May 2017 #339,” Legislation of Ukraine, the Verkhovna Rada of Ukraine: The Official Web-Portal, (Cabinet of Ministers of Ukraine Secretariat, 18 May 2017), http://zakon2.rada.gov.ua/laws/show/339-2017-%D0%BF/paran2#n2.
[68] Oleksandr Kozlov (MoJ), email exchange with IRM researcher, 22 Mar. 2019.
[69] “The Cabinet of Ministers of Ukraine. Decree on 18 December 2018 #1088-p.”
[70] Kaleniuk and Shevchuk.

Commitments

  1. Infrastructure Data Portal

    UA0070, 2018, Anti-Corruption

  2. Open Standard for e-System

    UA0071, 2018, E-Government

  3. Ensuring Openness and Transparency of Selling Public Assets and Property

    UA0072, 2018, E-Government

  4. Transparency in Public Procurement (Prozorro)

    UA0073, 2018, Access to Information

  5. Awarenss Raising About Social and Economic Development

    UA0074, 2018, Aid

  6. e-Calls for Proposals to Support CSOs

    UA0075, 2018, Civic Space

  7. Beneficial Ownership Registry

    UA0076, 2018, Anti-Corruption

  8. Anti-Corruption Training

    UA0077, 2018, Anti-Corruption

  9. Publishing Environmental Information

    UA0078, 2018, E-Government

  10. Database of Natural Resources

    UA0079, 2018, Access to Information

  11. Interactive Map of Mines

    UA0080, 2018, E-Government

  12. Priority Electronic Services

    UA0081, 2018, Citizenship & Immigration

  13. Online Platform for Executive Bodies and CSOs

    UA0082, 2018, Civic Space

  14. EITI Online Data

    UA0083, 2018, Access to Information

  15. Electronic Resources for Education

    UA0084, 2018, Access to Information

  16. Online Verification of Education Certificates

    UA0085, 2018, E-Government

  17. Free Access to National Repository for Academic Texts

    UA0086, 2018, E-Government

  18. Administrative Service Decentrilisation and Improvement

    UA0057, 2016, Capacity Building

  19. United State Portal Extension; Electronic Government Information Services Unification; Modern Tools for Electronic Identification

    UA0058, 2016, Capacity Building

  20. System for Entities Performing Government Functions

    UA0059, 2016, Anti-Corruption

  21. Free Urban Planning Documentation

    UA0060, 2016, E-Government

  22. Beneficial Ownership Verification System

    UA0061, 2016, Anti-Corruption

  23. CoST Beneficial Ownership Standards

    UA0062, 2016, Anti-Corruption

  24. Transpartent Budget System

    UA0063, 2016,

  25. Starred commitment Open Public Procurement

    UA0064, 2016, Access to Information

  26. Starred commitment Extractive Industries Transparency Initiative

    UA0065, 2016, Anti-Corruption

  27. Environmental Public Monitoring

    UA0066, 2016, Access to Information

  28. Community Policing System

    UA0067, 2016, Education

  29. Draft Law on Public Consultations

    UA0068, 2016, Legislation & Regulation

  30. Development of E-Democracy.

    UA0069, 2016, E-petitions

  31. Improve Government Rules on CSO Involvement

    UA0031, 2014, E-Government

  32. Financing of Charities

    UA0032, 2014, Civic Space

  33. Not-For-Profit Status for CSOs

    UA0033, 2014, Civic Space

  34. Public Participation Law

    UA0034, 2014, E-Government

  35. Establishing Rules on Processing Official Information

    UA0035, 2014, Access to Information

  36. Access to Urban Planning Documents

    UA0036, 2014, E-Government

  37. Starred commitment Access to Communist-Era Archives

    UA0037, 2014, Legislation & Regulation

  38. Starred commitment Draft Law on Open Data

    UA0038, 2014, Access to Information

  39. Starred commitment Supervisory Mechanism for the Right to Information

    UA0039, 2014, Access to Information

  40. Compliance with EITI

    UA0040, 2014, Anti-Corruption

  41. Monitoring of Infrastructure Projects

    UA0041, 2014, Anti-Corruption

  42. Adopt Regional Anti-Corruption Programmes

    UA0042, 2014, Anti-Corruption

  43. Corruption Risk Assessment Methodology

    UA0043, 2014, Anti-Corruption

  44. Starred commitment Asset Disclosure on a Single Web Portal

    UA0044, 2014, Anti-Corruption

  45. Law on Administrative Procedure

    UA0045, 2014, Legislation & Regulation

  46. Law on Streamlining Payment of Administrative Fees

    UA0046, 2014, E-Government

  47. Administrative Services Portal

    UA0047, 2014, Access to Information

  48. Draft Law on Decentralisation of Administrative Services

    UA0048, 2014, Legislation & Regulation

  49. Draft Law on Social Services

    UA0049, 2014, E-Government

  50. e-Government Laws

    UA0050, 2014, E-Government

  51. Electronic Readiness Assessment

    UA0051, 2014, E-Government

  52. Government Regulations on Open Data

    UA0052, 2014, Access to Information

  53. Electronic Democracy Development Roadmap

    UA0053, 2014, E-Government

  54. Open Budget Initiatives

    UA0054, 2014, Access to Information

  55. e-Petitions

    UA0055, 2014, Dispute Resolution & Legal Assistance

  56. e-Governance Training for Local Government

    UA0056, 2014, Capacity Building

  57. Laws on Public Participation

    UA0001, 2012, Civic Space

  58. Amendments to the Law on Community Associations

    UA0002, 2012, Civic Space

  59. Amendments to Resolutions on Collaboration with Civil Society

    UA0003, 2012, E-Government

  60. Training for Public Servants on Consultations

    UA0004, 2012, Capacity Building

  61. Harmonisation of Access to Information Laws

    UA0005, 2012, Access to Information

  62. By-Laws on Access to Information

    UA0006, 2012, Access to Information

  63. Guidelines for Classifying Data

    UA0007, 2012, Public Participation

  64. Public Information Recording Systems

    UA0008, 2012,

  65. Law on Public Broadcasting

    UA0009, 2012, Civic Space

  66. Public Access to Information in State Registers

    UA0010, 2012, E-Government

  67. Starred commitment Extractive Industries Transparency Initiative

    UA0011, 2012, Anti-Corruption

  68. Law for Controlling Declarations of Public Servants

    UA0012, 2012, Anti-Corruption

  69. Public Declarations of Officials’ Assets

    UA0013, 2012, Anti-Corruption

  70. Guidelines on Conflicts of Interest

    UA0014, 2012, Anti-Corruption

  71. Updated Anti-Corruption Laws

    UA0015, 2012, E-Government

  72. Regional Anti-Corruption Programmes

    UA0016, 2012, E-Government

  73. Law on Competitive e-Government Procurement

    UA0017, 2012, Anti-Corruption

  74. Starred commitment Administrative Services Reforms

    UA0018, 2012, E-Government

  75. Electronic Access to Administrative Services

    UA0019, 2012, E-Government

  76. Governmental Web Portal of Administrative Services

    UA0020, 2012, E-Government

  77. Administrative Services in a Digital Format

    UA0021, 2012,

  78. Starred commitment Regional Administrative Service Centres

    UA0022, 2012, Public Service Delivery

  79. Programme for Promotion of e-Government

    UA0023, 2012, E-Government

  80. Electronic Collaboration Between Executive Agencies

    UA0024, 2012,

  81. Web-Based Petitions System

    UA0025, 2012, E-petitions

  82. One Stop Shop for e-Reporting

    UA0026, 2012, E-Government

  83. e-Region Pilot Project

    UA0027, 2012, E-Government

  84. Network of e-Government Practitioners

    UA0028, 2012, Public Participation

  85. Public Libraries as Bridges Towards e-Governance

    UA0029, 2012, E-Government

  86. e-Government Knowledge Management Portal

    UA0030, 2012,

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