The Financial Action Task Force(FATF) is considering proposals for amendments to Recommendation 24 and its Interpretive Note on the transparency and beneficial ownership of legal persons. After a White Paper consultation in June-August 2021 on a number of key policy areas, FATF analysed the views received from various stakeholders in considering potential amendments. In its consultation document just published, it proposes a number of amendments designed to reinforce the Recommendation and achieve greater transparency on the beneficial ownership of legal persons.
The specific purpose of the amendments appears to be to focus on:
- Its multipronged approach to the collection of Beneficial Ownership information
- Bearer Shares and Nominee arrangements, including nominee directors
- Risk-Based Approach
- Access to Information
The majority of these areas are already being applied in the EU and so the impact is likely to be felt more in those countries where there is limited anti-money laundering regulation and no registers of beneficial owners. However, the EU continues with its own initiatives to improve transparency. Also to note, there is a new focus on nominees and nominee directors, as well as the bearer share arrangements. The draft amendment extends the ability of countries to apply beneficial ownership regulations where the company has a nexus other than just incorporation.
While the provisions dealing with access concentrate on access by competent authorities, there is an additional statement that countries could consider allowing public access.
The consultation document does not take the opportunity to consider the concept of beneficial ownership itself and to clarify a number of ongoing questions regarding its interpretation. The fact that the concept is being increasingly used in the context of other regulations demanding transparency makes this all the more important.
FATF requests views from companies and other legal persons, financial institutions, designated non-financial businesses and professions (DNFBPs), and non-profit organisations, but also welcomes contributions from other interested stakeholders. FATF states that it welcomes views on specific proposals of the amendments to the text, as well as on the broader themes that they address.
The responses including any drafting proposals must be sent to FATF.Publicconsultation@fatf-gafi.org with the subject line “Comments of [author] on the draft Amendments to Recommendation 24”, by 3 December 2021.
The public consultation paper can be found here.