Plan to beef up beneficial ownership oversight unveiled by FATF

The Financial Action Task Force has released a white paper for public consultation on the transparency and beneficial ownership of legal persons to strengthen measures that will prevent criminals from hiding illicit activity and proceeds, as one of its action points after the fourth Plenary under the German Presidency of Marcus Pleyer on 21-25 June.

Earlier this month, G7 Ministers highlighted the effectiveness of beneficial ownership registries as a tool to tackle it, while also agreeding to implement and strengthen their own national registries of company beneficial ownership information.

The FATF is considering amendments to strengthen Recommendation 24 on the transparency and beneficial ownership of legal persons, including a multi-pronged approach to ensure beneficial ownership information is available to competent authorities, as well as stronger measures to manage the risks of legal persons, and stricter controls on bearer shares and nominees.

"Transparency about the true beneficial ownership of companies is crucial to stop criminals from hiding their illicit activities and proceeds behind complex corporate structures," the FATF said. "Front companies are used to hide criminal activities from law enforcement, including environmental crime and corruption."

Improving beneficial ownership transparency has been on the FATF agenda since 2003 when it introduced the first global standards on this subject. However, mutual evaluations and major investigations have shown that countries are still not doing enough to ensure that beneficial ownership information is available and up to date, and to prevent the abuse of company structures by criminals.

The white paper released for public consultation is open for comment until 27 August 2021.

The FATF said it will discuss next steps at its October 2021 Plenary meeting.

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