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Four Ways Beneficial Ownership Transparency Can Benefit the Extractive Industries and Beyond

Cuatro formas en que la transparencia en los beneficiarios reales puede beneficiar a las industrias extractivas y a otros sectores

Sarah Dickson|

Around the world, anonymous companies are often used as a tool to hide corruption. To combat tax evasion and stop illicit financial flows, open government reformers are advocating for public beneficial ownership registries that would require companies to disclose who ultimately controls or profits from a business. With this information, governments can improve procurement and tackle criminal activities, and civil society actors and journalists can investigate corruption. 

Countries such as Armenia, Indonesia, Mongolia, Nigeria, and the Philippines have used their OGP action plans to make progress in beneficial ownership transparency, with some expanding sector-specific registries to cross-sector registries, and others opening beneficial ownership data to the public. OGP created the Beneficial Ownership Leadership Group with Open Ownership and convenes frequent cross-country peer exchanges to support OGP members working to advance global norms on beneficial ownership transparency.

A Spotlight on the Philippines

In the Philippines, beneficial ownership disclosure is a commitment under three international initiatives: the Extractive Industries Transparency Initiative (EITI), the Financial Action Task Force, and their OGP action plan. Entities in the extractives industries are required to publish beneficial ownership information. In July 2019, the Securities and Exchange Commission issued additional requirements to strengthen beneficial ownership disclosure in the country, making it easier to compel mining, oil, and gas companies to disclose their data. However, it limits beneficial ownership information access to competent authorities only, rather than making it publicly available. As reformers in the Philippines continue to advocate for increased beneficial ownership transparency, they have encountered issues that early adopters of these reforms often face, including determining how to reconcile and harmonize government policies for beneficial ownership data disclosure, how to address privacy concerns, and how to expand the scope of the register beyond one sector. 

Here are a few takeaways on common country experiences from our conversations with beneficial ownership reformers in the Philippines, Armenia, Indonesia, Mongolia and Nigeria: 

  • Harmonize beneficial ownership register requirements with privacy laws. When companies submit beneficial ownership data to be included in a register, they often have concerns around what data will be made public. For this reason, it is important to clearly define the purpose for the release of information and publish only what is necessary for public oversight. In Nigeria, reformers involved representatives from the private sector in the early stages of the beneficial ownership transparency reform process, which helped to ensure that they addressed the concerns of companies while still upholding the principles of open access to beneficial ownership data and adhering to privacy laws. This allowed for reformers to build trust and make the case that public interests correlate with business interests, and transparency and accountability make everyone better off.
  • Single-sector registers can serve as pilots for cross-sector registers. Many countries, including the Philippines, begin the process of beneficial ownership reform through the establishment of a single-sector register, often for extractives industry companies. Based on the lessons learned through piloting a single-sector register, reformers can build on their experience to expand across sectors. Beginning with a single-sector focus also helps advocates demonstrate the impact of beneficial ownership reform, providing a basis of evidence for the expansion to broader cross-sector reform, and can help build the case for the value-add of beneficial ownership transparency.
  • Beneficial ownership disclosure helps companies do business. Publicly accessible beneficial ownership data is not just beneficial to governments and citizens. When companies can access beneficial ownership data, they can make business deals with other companies with confidence. In Armenia, some private sector beneficial ownership  advocates have observed an increase in trust after the first publication of beneficial ownership data, and private sector stakeholders are interested in continuing to work with reformers to co-design improvements to the beneficial ownership registration system as they see the benefits of the data. In Nigeria, private sector advocates view beneficial ownership transparency as a key component of broader corporate transparency and believe that active participation of corporate actors can help build buy-in among the private sector for sustained reform.
  • Beneficial ownership data strengthens the advocacy work of civil society organizations. When civil society organizations have access to publicly available beneficial ownership data, they can analyze company ownership structures and use data to identify money laundering and flag concerns to government officials. Similarly, journalists can use the data to support investigations exposing corruption. In Indonesia, Publish What You Pay Indonesia is strengthening community understanding of beneficial ownership data use and getting more citizens involved in transparency and accountability initiatives through tools and guides,  

As countries continue to make strides in strengthening beneficial ownership transparency, societies will feel the benefits of more efficient tax systems, improved government procurement practices, the recovery of stolen assets, and more. Despite the progress that has been made, countries working on beneficial ownership reform continue to face common challenges, such as balancing publication with privacy, ensuring proper verification of beneficial ownership data, and developing consequences for noncompliance. International beneficial ownership advocates are providing tools and guidance to reformers, like Open Ownership and EITI’s beneficial ownership model declaration form. In the wake of the COVID-19 pandemic, the implementation of beneficial ownership transparency reforms will be crucial to ensure that government procurement and relief packages are implemented effectively and transparently.

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