Learning the lessons from the UK’s public beneficial ownership register

  • Publication date: 02 November 2017
  • Author: Global Witness

Introduction

In 2016 the UK became one of the first countries to create a public register of the beneficial owners of companies.[1] The UK register, called the register of Persons with Significant Control (PSC), has both demonstrated the feasibility of public registers and set new standards in publishing the data as open data, allowing others to analyse the data in bulk.[2] While the UK register has been pioneering, there is much that can be learnt - both to improve the UK register and for others considering or establishing public beneficial ownership registers.

There are currently at least three countries implementing public beneficial ownership registers for companies [3], at least 12 countries committed to doing so, and 20 countries planning public registers for extractive industries [4]. In addition, the EU is considering the establishment of public registers of beneficial ownership for companies across all 28 EU Member States as part of the negotiations for the 5th Anti-Money Laundering Directive.

What led to the creation of the UK register?

The UK committed to introduce a register of beneficial ownership as part of a raft of measures to tackle corruption and tax dodging at the UK-hosted G8 summit in June 2013, and then committed to make the register publicly accessible in October that year.

The government had been considering introducing a public register for over 10 years but only made the commitment after a sustained campaign by a broad coalition of civil society organisations in the lead up to the summit. This campaign connected issues of corruption, tax dodging and international poverty and used a wide range of tactics, including organising a petition from small business owners, mass public mobilisations and engagement with the mainstream media.

In 2002, the UK government carried out a cost-benefit analysis different models of collecting beneficial ownership data, including public registries.[5] Global Witness commissioned the same consultant to update the cost figures in 2013.[6] This found that the savings in police time in having this information publicly available would be more than double the combined cost to the public sector of running the database and the cost to the private sector of submitting the data – let alone the other wider benefits to the public sector and to businesses. The cost-benefit analysis was crucial in securing government support for a public register.

The support of business groups also helped ensure government buy-in. The UK’s Institute of Directors stated that “so-called ‘anonymous companies’, in which the corporate veil is used to conceal illegal activities, have no place in a modern economy and bring the entire business sector into disrepute.”[7] The European Banking Federation also supported the introduction of public beneficial ownership registers across Europe.[8]

What the data shows

The information on the register is made freely available by the UK’s Companies House both as a searchable web interface as well as structured data in machine-readable format.[9] Crucially this data is available under an open data licence which means that it can be reused by other organisations and individuals without any restrictions.

Publishing the registry as open data allows journalists or civil society organisations to analyse the database as a whole, rather than just viewing each company individually. In November 2016 Global Witness, DataKind UK, OpenCorporates, Spend Network and OCCRP worked with 30 volunteer data scientists to undertake an initial analysis of the first 1.3 million companies that had submitted ownership data to the UK registry[10] .

This analysis allowed these organisations to identify signs of non-compliance with the law. For example, 9,800 companies listed their beneficial owner as a foreign company. This is possible if the foreign company was listed on one of the stock exchanges deemed equivalent to the UK system (e.g. the US, EU and Japanese exchanges). However, of these companies almost 3,000 listed their beneficial owners as companies with addresses in tax havens. This is not allowed under the rules.

The registry could also be compared to other data sets. Initial findings suggest 19 senior politicians (known as politically exposed persons), 76 people from the U.S. sanctions list and 267 disqualified directors were listed as beneficial owners. However, these matches were based on name and month and year of birth so are not conclusive.

Making the data publicly available can greatly enhance accuracy by allowing users of the data - be they private sector, civil society, or public sector - to review and report errors in the data. In the case of the UK public company registry, the UK’s Companies House confirmed that within the first six months they were following up on multiple contacts from the public highlighting inaccuracies in the data.[11]

Footnotes

[1] For background on beneficial ownership, anonymous companies, and why public registers of beneficial ownership are important see these briefings from Global Witness and Open Ownership.

[2] For more on open data see the International Open Data Charter Principles.

[3] UK, Ukraine, Denmark.

[4] List of EITI countries introducing public registers for extractive industries available here

[5] HM Treasury/DTI, ‘Regulatory impact analysis - Disclosure of beneficial ownership of unlisted companies’ July 2002. Available here.

[6] John Howell & Co. Ltd, ‘Costs Of Beneficial Ownership Declarations’, April 2013. (Commissioned by Global Witness).

[7] Government Opportunities, ‘IoD welcomes consultation on trust and transparency’ 16 July 2013. Available here.

[8] EBF, ‘Position on the European Commission Proposal for a 4th EU Anti-Money Laundering Directive’, April 2013. Available here.

[9] The beneficial ownership register is held by Companies House, which also provides the register of all UK companies. Beneficial ownership information can be found by searching for a company, navigating to ‘People’, then ‘Persons with significant control’. The bulk data is available as JSON files or as an API.

[10] Robert Palmer and Sam Leon, ‘What does the UK beneficial ownership data show us?’ 22 November 2016. (Global Witness Blog).

[11] Companies House – Email Correspondence with Global Witness – 9 February 2017.

Next page: A model of best practice