G20 countries moving too slowly to combat financial crime

Just over two years since the Panama Papers revealed widespread use of anonymous shell companies to facilitate corruption and financial crime, governments in the world’s largest economies are still moving too slowly to ensure that citizens and law enforcement can find out who really owns companies operating within their borders.

According to a report published today by Transparency International, 11 G20 countries still have “weak” or “average” legal frameworks for beneficial ownership transparency, despite adopting the G20 High-Level Principles on Beneficial Ownership Transparency in 2014. While some progress has been made since a similar assessment was conducted in 2015, notably in France, Germany, Italy and Brazil, all G20 countries have significant room for improvement.

In particular, ten G20 countries and two G20 guest countries have “very weak” legal frameworks when it comes to providing law enforcement, tax authorities and financial intelligence units with access to any beneficial ownership information.

The UK is the only G20 country to have established a central register of beneficial ownership information that is publicly available. All other governments should follow suit.

“Since the G20 Principles were adopted, we’ve seen more and more examples of how financial secrecy facilitates cross-border corruption. G20 countries should be leading the way to put a stop to this. While they drag their feet, countries such as Afghanistan, Ghana and Nigeria have been moving forward with plans for important mechanisms like public registers of beneficial ownership,” said Maggie Murphy, senior global advocacy manager at Transparency International.

Argentina, India, Russia, Saudi Arabia, South Africa and Turkey have not significantly improved their framework since 2015. Canada and South Korea lag especially far behind as the only two countries of the 23 analysed that have a “weak” beneficial ownership transparency framework overall.

“In 2018 Canada is at the bottom of the pack in terms of meeting G20 commitments to beneficial ownership transparency,” said Alesia Nahirny, executive director of Transparency International Canada. “The glacial pace of progress by the federal, provincial and territorial governments is an invitation to the corrupt, tax evaders and money launderers to continue “snow washing” their dirty money in Canada. Meanwhile Canada’s reputation deteriorates further with only words to show and no concrete accomplishments.”

For many of the countries assessed an absence of processes for verifying registered company information; overdue money-laundering risk assessments; and insufficient regulation of lawyers, accountants and nominee shareholders are issues. Real estate agents in five G20 countries (Australia, Canada, China, South Korea and the United States) are not required by law to identify the beneficial owners of clients buying and selling property, despite recent major corruption scandals involving high-end real estate.

Delia Ferreira Rubio, chair of Transparency International, said, “The leaders of the G20 nations need to pick up the pace. Time and again, we’ve seen how it is anonymous shell companies that make the world of corruption go round. Simply making it possible to find out who ultimately owns a legal entity should be an obvious step towards preventing abuse of the financial system by the corrupt and other criminals. Are the G20 leading the pack, or are they happy to keep lagging behind?”

The full report, titled “G20 Leaders or Laggards?” https://www.transparency.org/whatwedo/publication/g20_leaders_or_laggards is available for download, along with an executive summary.

Notes to editors:

Transparency International analysed the national legal frameworks related to beneficial ownership transparency of the G20 countries (not including the EU), plus four guest countries: Netherlands, Norway, Spain and Switzerland.

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