Research Symposium Synthesis Report: Evidence and impact of beneficial ownership transparency
Beneficial ownership transparency of assets
To date, BOT has primarily focused on the ownership and control of legal vehicles rather than of the assets they own, but new proposals are being put forward to increase BOT in this area. While registers for certain assets like real estate and motor vehicles are comparatively common, research presented at the Symposium indicates that ownership registers for others such as artwork and other high-value assets are less so. Where they do exist, they often have neither information on beneficial ownership nor ready interconnections with BO registers. Tracing asset ownership across jurisdictions can lead to dead ends and frequently requires extensive manual work to piece together different sources. This, in turn, complicates both the investigation and early detection of financial crimes or other offences like tax evasion.
Transparency organisations are increasingly calling for a global asset register to address this. However, there is no comprehensive exploration of potential solutions, and there remains limited practical guidance on how a global asset register could be implemented. Presentations and discussions at the Symposium looked at practical options and tradeoffs in this relatively novel area of BOT advocacy and implementation, including interconnecting BO and asset registers and collecting data on more assets.
Studies of ownership opacity in a given sector and location can reveal patterns in higher-risk purchases in different contexts, but the lack of standardised data collection on the beneficial ownership of assets limits researchers and others’ ability to carry out this work systematically in most countries.
Real estate is known to be misused for money laundering, and presentations demonstrated the value of researchers having enough data to analyse ownership networks behind these assets. One focused on real estate in Milan, Italy to understand the city’s exposure to high-risk investors. The researcher’s work-in-progress shows the amount of real estate assets linked to high-risk jurisdictions, and that higher-risk purchases are not exclusive to the luxury segment but rather distributed across asset types and prices. Preliminary findings from a second project into illicit financial flows and real estate in France, by contrast, suggests that both offshore and opaque ownership is notably more prevalent at the higher end of the market, especially for the very highest priced assets. These studies of ownership opacity in a given sector and location can reveal patterns in higher-risk purchases in different contexts, but the lack of standardised data collection on the beneficial ownership of assets limits researchers and others’ ability to carry out this work systematically in most countries.
Where asset registers do exist, the divergence between how they are organised is considerable. Moreover, the purpose of existing asset registers is typically to establish legal certainty over ownership rights rather than to ensure transparency and accountability, and they are rarely designed to integrate with other datasets. A small number of jurisdictions – such as the UK and British Columbia, Canada – do have frameworks focused on BOT of land, each following a different approach. New research presented at the Symposium considers the approaches taken in different jurisdictions. It suggests that it may ultimately be more effective to strengthen existing land (or real estate) registers and BO registers for legal vehicles separately and to interconnect these registers, rather than to create new, standalone registers for the beneficial ownership of land.
This finding may also be applicable to other types of assets, though there is far more work to be done to understand how registers should be organised under which authorities in different sectors, and how to capture information at the right level of detail. For example, research presented from the fisheries sector highlighted that identifying those who benefit from, own, or control fishing operations can be a highly complex task, as fishing quotas can be leased, resold, and traded; owners of the fishing rights might be different to the owners of the fishing licence, and different again from the owners of the vessel. In such cases, it can be difficult to delineate which authority should collect which information.
While there are increasing moves towards transparency in the beneficial ownership of assets, these are currently more contentious than BOT for legal vehicles. Given the complexity, it is unsurprising that making the argument for BOT of assets remains more challenging than it is for companies. BOT can be seen as part of a healthy business environment and a reasonable tradeoff for accessing the limited liability that legal entities provide. Asset ownership confers no such advantage, and the sheer array of potential assets and interest types that could potentially be captured raises concerns about an excessive compliance burden. When discussing BOT for assets, the resultant concerns over the interference with privacy are higher among some quarters, and views were somewhat split among the Symposium attendees.
At the more maximalist end of reporting scenarios, some at the event advocated for expanding the list of asset purchases which should be registered to include types of assets that have not historically been recorded, such as luxury fashion items or livestock. Such requirements could potentially help identify individuals with large but undeclared, or illicit, income and overcome some of the existing challenges for BOT of assets, including the lack of dedicated registers for many assets. To enforce requirements for ownership declarations to be made, one option would be to introduce punitive measures, such as not allowing the rental of property whose beneficial ownership is not disclosed, or applying punitive taxes until such a declaration is made. However, other attendees expressed concern over such aggressive approaches, especially in jurisdictions where democratic governance is not robust and where noncompliance could theoretically be used as a pretext for state seizure of private assets. Given the nascent stage of work on the BOT of assets, it is likely that more extensive research, experimentation, and debate will be required to establish what approaches work best for this frontier topic.