Building an auditable record of beneficial ownership
Feature four: visible information gaps
"What reason was given for no beneficial owners at all being disclosed a year earlier?"
When examining a ledger of beneficial ownership, information that we expect to see may sometimes be missing. That might be for any number of reasons, for example:
- by design (for instance, because an entity is exempt from reporting its beneficial owners);
- failure by the declaring person to disclose information;
- failure of the declaration system to retrieve information;
- information being legitimately withheld from publication by the declaration system (for example, under the provisions of a protection regime).
Sometimes an information gap will itself form a feature of the ledger, for example, when an entity reports that it has no beneficial owners at a given point in time. Sometimes the information gap will only be visible and explained outside the ledger: for example, a company shows up in a public record of entities which are exempt from beneficial ownership reporting. But in most cases, the gap in the information should be made apparent within the ledger and its reason made clear.
BODS already goes some way to accounting for information gaps, but there is more to be done to address the full range of relevant information gaps. Whether using BODS or another standardised format for publishing beneficial ownership data, it should be a simple matter to determine which entities have disclosed no beneficial owners, and why.
Recommendation
- If information is missing from beneficial ownership records, registers should be able to capture the reasons why it is missing, rather than just leaving a gap.