This section covers how SCIESU currently processes license applications, and makes recommends on these areas and on the issue of data verification. We reviewed what data is currently collected and how, and SCIESU’s plans for collecting and publishing beneficial ownership information. This included a review of the draft disclosure form for companies to submit their beneficial ownership information.
How data is collected
Currently, applications are received in hard copy or scanned PDFs on CD, and basic details are input manually into SCIESU’s database. Beneficial ownership information is currently collected in hard copy or scanned PDFs. Scanned PDFs cannot easily be converted into structured data, meaning this information is of limited use to SCIESU or other users beyond the basic processing of applications. For example, it is not currently easy to identify whether multiple license applicants have the same beneficial owner. In addition, the number of license applications received has increased over recent years, and this along with the backlog of applications awaiting processing has contributed to a backlog in scanning information received in hard copy.
SCIESU’s plan for collecting beneficial ownership data is to require companies to submit via a disclosure form. We reviewed a draft of the disclosure form, and found that whilst it in theory should capture much of the information, its design is likely to result in inaccurate information being submitted and mistakes when data is entered into the SCIESU database. For example, the form groups several types of information together (e.g. one box is for date of birth, citizenship number, date of issue and issuing authority). In addition, SCIESU staff and companies raised concerns about the quantity of information required on this form.
When staff enter information onto this database, basic information about the applicant or license holder is then automatically published on the SCIESU website, along with structured data on information such as license coordinates. A similar process could be adapted to publish beneficial ownership information.
SCIESU should explore with the EITI Multi-Stakeholder Group the practicality of encouraging companies to submit some or all information electronically; this would dramatically decrease the SCIESU resources required to process license applications, and improve accuracy. Electronic forms offer simple and instantaneous validation that paper forms cannot; for instance ensuring that the date of birth is reasonable (the person wasn’t born in the future) or that a legitimate nationality is reported.
Recommendation 13: Digitalise the submission process as much as possible
Although a fully electronic submission process is not likely to be practical, one option is to explore whether computer terminals could be provided at the SCIESU office, so that companies could complete the electronic forms on-site. Open Ownership has developed an intuitive data submission process with feedback from businesses, and is happy to provide technical assistance on developing electronic forms for collection of beneficial ownership data.
Digitised submission would also enable SCIESU to identify where data is missing and record in the database the reason for this.
Verification of data
SCIESU’s position is that companies should be liable for submitting correct data. Neither the Subsoil Law, draft regulations or submission processes require SCIESU to undertake any verification of the beneficial ownership data that is submitted. There is concern within SCIESU about the feasibility and resource implications of verifying data about beneficial owners who are foreign nationals. However, there is a commendable appetite within SCIESU for civil society actors to perform verification roles, once the data is publicly published. Some of the information collected, such as links to stock exchanges, could easily be checked by SCIESU staff, and other published data will assist civil society actors in performing verification.
Basic checks, for example, through SCIESU requiring and viewing supporting documents during the application process, would strengthen the accuracy of published data. It would also provide valuable additional information for SCIESU to incorporate into their due diligence when assessing applications. We believe this is both possible and useful under SCIESU’s legal remit to manage the technical process of license applications.
Recommendation 14: SCIESU should undertake basic verification to improve data quality and enable red flags to be surfaced
Once data is stored in structured format, provided it is granular enough it can automatically be cross-checked with other datasets held by the government, such as tax and passport authorities. This would help agencies to surface inconsistencies and red flags. An appropriate agency should be given mandate to carry out this function, which would significantly increase compliance.
Publishing beneficial ownership information as structured data, at a granular enough level and with sufficient data points to enable matching to other publicly available datasets within the Kyrgyz Republic and internationally, will greatly enhance the ability of civil society actors to undertake additional verification independently. SCIESU can incentivise users to do this, for example by providing a form for users to submit notices of missing or incorrect information on company records (this system is used by UK Companies House).
Coordination with partners
The success of the beneficial ownership regime for extractives license holders will depend to some extent on the coordination with other government departments and external partners. SCIESU has already taken steps to liaise with some departments and engage external partners through the EITI Multi-Stakeholder Group. These activities should deepen and continue as implementation progresses, and include working with partners to better understand different use cases for the data.
Recommendation 15: SCIESU should coordinate with other Government departments and external stakeholders to ensure successful implementation
In addition, we recommend that SCIESU works with the Ministry of Justice to ensure that all required information on domestic license holders is stored and accessible in the electronic database of legal entities and branches. Coordination with the EITI Multi-Stakeholder group will continue to be important, both for seeking feedback from companies and civil society users of the data, and raising awareness of the new requirements for companies, and the new opportunities for companies and civil society to use the data. Gaining user feedback regularly throughout the implementation process will significantly increase the prospect of a successful beneficial ownership regime, with good levels of compliance and widely used data.
The Open Ownership team and Helpdesk are available to advise and support SCIESU, and in addition to the technical assistance being provided through the Open Ownership Pilot Programme, we encourage SCIESU to use the Open Ownership Helpdesk to link to international best practice on matters such as company identifiers.