The Open Ownership Principles — Sanctions and enforcement

Adequate sanctions and enforcement should exist for noncompliance

  • Effective, proportionate, dissuasive, and enforceable sanctions should exist for noncompliance with disclosure requirements, including for non-submission, late submission, incomplete submission, or false submission.
  • Sanctions that cover the person making the declaration, the beneficial owner, registered officers of the company, and the declaring company should be considered.
  • Sanctions should include both monetary and non-monetary penalties.
  • Relevant agencies should be empowered and resourced to enforce the sanctions that exist for noncompliance.
  • Data on noncompliance should be made available.

Having adequate sanctions in place, and enforcing these effectively, helps to drive up compliance with disclosure requirements and increase the quality and utility of the data. Including sanctions against the beneficial owner, registered officers of the company, and the company making the declaration helps ensure that the deterrent effect of sanctions applies to all the key persons and entities involved in the declaration. This helps incentivise compliance from the beneficial owner, registered officers, and broader stakeholders involved in the governance and management of the company.

Sanctions can only act as an effective deterrent if they are fairly and proportionately enforced in practice. To do this, relevant agencies require both the legal mandate and adequate resources to identify suspected noncompliance, investigate appropriately, and issue sanctions. Sanctions should include both monetary and non-monetary penalties, which can cover certain business-related rights, such as not being able to incorporate a company or not being paid out dividends from shares.

Data on noncompliance should be made available to improve data utility and reliability. Implementers can take a number of approaches to this, for instance, by clearly indicating where information has not been updated within the legally required period, or, when BO data is used in procurement, by having a blacklist of noncompliant companies.

Implementation Guide

This OO Principle is particularly relevant in the following aspects of implementation. These correspond to steps in our Implementation Guide.

Resources

Verification of beneficial ownership data
Briefings · Open Ownership · May 2020

A policy briefing on verification best practice, case studies and implementation.

It is available in English, Spanish and Indonesian.