Focusing on What Works for International Anti-Corruption Day 2024: Beneficial Ownership Transparency
Corruption is a highly complex threat to democratic governance worldwide, but one that to an extent can be addressed via simple solutions—like beneficial ownership transparency. Kleptocrats and their cronies hide their businesses and assets through offshore and layered ownership structures to avoid detection of their illicit activities such as bribery, conflicts of interest, money laundering, and pilfering of public funds. Getting rid of the anonymity of beneficial owners1 and structures like shell companies must be the foundation for democracies truly invested in anti-corruption reform. Where financial secrecy is allowed, democracy suffers at the hands of kleptocrats and authoritarians.
Beneficial ownership transparency is when governments require companies and other legal entities operating within their borders to report data on their true owners and shareholders, resulting in the creation of a central ownership register. This information can reveal undeclared assets, hidden ties between public and private sector actors, and unexplainable wealth, enabling the relevant authorities to detect and investigate corrupt activities. When these registers are made publicly accessible, they also enable watchdog organizations and journalists to conduct additional oversight. As such, beneficial ownership transparency is one of the most powerful tools against not just localized corruption, but also against transnational kleptocracy that relies on illicit financial flows remaining untraceable in order to hide and launder stolen wealth.
Support for beneficial ownership transparency is growing, with almost 100 central registers currently in operation and over 50 more planned or in the process of implementation, according to Open Ownership’s global tracker. In some countries, like the United Kingdom and Ukraine, this data is even published online and publicly available. In addition, 52 Open Government Partnership (OGP) countries have made related commitments to publish some form of beneficial ownership data.
Based on decades of experience empowering civil society and government partners to fight corruption, the International Republican Institute (IRI) recognizes the promise of beneficial ownership transparency to strengthen global democracy. To support anti-corruption champions to achieve greater transparency in their countries, IRI developed Beneficial Ownership Transparency: A Roadmap for Civic Activists and Non-Governmental Actors. This Roadmap guides stakeholders through key decision points, from initial advocacy to policy design, and eventually the implementation of legislation and live registers. IRI’s report also includes case studies on Albania, Malaysia, and Mexico that explore the conditions that led to beneficial ownership transparency reforms in each country.
To share the Roadmap’s findings and support national advances in transparency, IRI also engaged with government officials, civil society activists, journalists, and academics through workshops in the case study countries. Despite geographic and political diversity between Mexico, Malaysia, and Albania, during the three workshops a common theme emerged regarding the need to build national understanding of the benefits of beneficial ownership transparency—particularly among policymakers and the private sector. These advantages include not just countering corruption, but also strengthening government efficiency and digitization, as well as fair business practices and open competition. To build greater awareness, IRI is working with local civil society organizations in each country to conduct outreach campaigns and gain buy-in amongst key stakeholder groups for transparency reforms.
Beyond these countries, IRI will continue to support global activists to push for transparent governance and accountability, one of the pillars of a strong democracy. Counterarguments for continued secrecy of beneficial owners demonstrate corrupt individuals’ fear that anti-corruption champions will expose their abuse of power. As beneficial ownership transparency standards advance in nations around the world, they will not find it as easy to exploit international financial systems to hide their illicit wealth and weaken democracies.
[1] Beneficial owners are the real people who ultimately own or have significant control of a company or other legal entity.
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