Principles for Effective Beneficial Ownership Disclosure

The following outlines nine principles for effective beneficial ownership disclosure designed to make published data easy to use, accurate, and interoperable. Disclosure frameworks that implement these principles have a much greater chance of beneficial ownership data being used to deliver policy impact on key areas such as anti-money laundering, tackling corruption, and reducing tax avoidance at national and international levels.

Effective disclosure needs high quality, reliable data to maximise usability and minimise loopholes. The nine principles are core tenets of effective disclosure, and encapsulate a range of policy and legal systems as well as data and technology characteristics for an effective disclosure regime. A disclosure framework that applies the Principles will provide a comprehensive overview of the ownership of companies registered in the country in question. This supports achievement of policy goals including tackling money laundering, reducing corruption, and increasing domestic resource mobilisation.

The nine principles have been reached through Open Ownership’s work developing the Beneficial Ownership Data Standard and supporting almost 40 countries to advance beneficial ownership transparency. They are informed by established approaches for publishing open data and review of available research and evidence. For further information on how to incorporate these principles into your country’s beneficial ownership reform programme, please view the resources on the webpage for each of the Principles, and contact support@openownership.org to discuss the support we could provide.

Draft principles

Last updated: July 2020

Beneficial Ownership should be clearly and robustly defined in law, with low thresholds used to determine when ownership and control is disclosed

  1. Robust and clear definitions of beneficial ownership should cover all relevant forms of ownership and control.
  2. Low thresholds for triggering BO disclosure should be used so that most, or all, people with beneficial ownership and control interests are included in disclosures.
  3. Particular consideration should be given to thresholds that apply to ownership by politically exposed persons (PEPs), with a clear definition used to determine what constitutes a PEP.
  4. Absolute values, rather than ranges, should be used when reporting the percentage of ownership or control that a beneficial owner has.

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Disclosure should comprehensively cover all relevant types of legal entities and natural persons

  1. All relevant legal entities and arrangements, and all relevant natural persons (i.e. people), should be included in disclosures.
  2. Any exemptions of certain types of entity from the disclosure requirements (such as for listed companies) should be clearly defined and justified, and information on the ownership of such entities should be collected elsewhere with comparable levels of quality and access.
  3. Particular attention should be given to the disclosure requirements relating to ownership by state owned enterprises (SOEs).

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Beneficial ownership disclosures should contain sufficient detail to allow users to understand and use the data

  1. Key information should be included about the beneficial owner, the disclosing company, and the means through which ownership or control is held.
  2. Clear identifiers should be used for people and companies.
  3. Politically exposed persons should be clearly identified within the data.
  4. Where beneficial ownership is held indirectly through multiple legal entities, sufficient information should be published to understand full ownership chains.

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Data should be collated in a central register

  1. Beneficial ownership disclosures should be collated and held within a central register.

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Data should be accessible to the public

  1. The public should have access to beneficial ownership data.
  2. Data should be accessible without barriers such as payment, identification, or registration requirements.
  3. Published information should be sufficient for users to understand and use the data to achieve policy goals, while respecting relevant privacy laws.
  4. Where information about certain classes of persons (e.g. minors) is exempt from publication, the exemption should be clearly defined and justified.
  5. Where a disclosure system permits exemptions on a case-by-case basis (for example, to mitigate personal safety risk), the grounds for exemption should be clearly defined, proportionate, and fairly applied.
  6. Where data has been exempted from publication, the publicly available data should note that beneficial ownership information is held by authorities but has been exempt from publication.

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Data should be structured and interoperable

  1. Beneficial ownership data should be available as structured data, with each declaration conforming to a specified data model or template.
  2. Data should be available digitally, including in a machine readable format.
  3. Data should be available in bulk as well as on a per record basis.

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Measures should be taken to verify the data

  1. When the data is submitted, checks should be made to ensure values conform to known and expected patterns.
  2. Where possible, key information should be cross-checked against existing authoritative systems and other government registers
  3. Supporting evidence should be required to enable details to be checked against original documents.
  4. Measures should be taken to verify the identity of the person making the disclosure.
  5. After data has been submitted, it should be checked to identify potential errors, inconsistencies, and outdated entries, using a risk based approach where appropriate, requiring updates to the data where necessary.
  6. Mechanisms should be in place to raise red flags, both by requiring entities dealing with beneficial ownership data to report discrepancies and by setting up systems to detect suspicious patterns.

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Data should be kept up to date and historical records maintained

  1. Initial registration and subsequent changes to beneficial ownership should be submitted in a timely manner, with information updated within a short, defined time period after changes occur.
  2. Data should be confirmed as correct on at least on an annual basis.
  3. All changes in beneficial ownership should be reported.
  4. An auditable record of the beneficial ownership of companies should be created by dating declarations and storing historical records.

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Adequate sanctions and enforcement should exist for non compliance

  1. Effective, proportionate and dissuasive sanctions should exist for non-compliance with disclosure requirements, including for non-submission, late submission, incomplete submission, or false submission.
  2. Sanctions should be considered that cover the person making the declaration, the beneficial owner, registered officers of the company, and the company making the declaration.
  3. Sanctions should include both monetary and non-monetary penalties.
  4. Relevant agencies should be empowered and resourced to enforce the sanctions that exist for non-compliance.

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