Beneficial ownership database

Access to the beneficial ownership database is free and the information is included in the Unified State Registry of Organizations and Enterprises.¹ The registry was updated in 2020 to make beneficial ownership information more structured. Transliteration from Cyrillic to Latin script is not provided, however. Ukraine established a working group called Dostovirno, made up of government agencies, civil society, donor representatives, businesses and other stakeholders in the process, to develop the verification mechanism.² The group proposed a mechanism for verification,³ but there is no agreement among the government agencies on the responsibilities as yet, and discussions are ongoing. The cabinet has to adopt a concept and action plan for the verification. Ukraine created an international Telab⁴ strategic group to grow into the community that aims for cross-border cooperation on beneficial ownership and a unified approach to its verification. The ministries of finance and justice are working on a format and the content for changing of the property structure of legal entities in accordance with the new AML law.⁵ Cabinet has issued a decree⁶ on the disclosure of beneficial ownership information for all COVID-19 procurements.

Challenges to effective commitment implementation
One of the greatest challenges to the effective implementation of this commitment is the change in Ukrainian government. Since 2019, Ukraine has had two prime ministers, and several heads of the ministries have changed as well. The president of Ukraine has declared that the people in his team have to show results in six months, otherwise they will be dismissed.⁷

Agencies do not want to take responsibility for the verification. There are many governmental agencies involved in the implementation of the commitment, especially on the verification side. When deciding on the process of verification, there should be one agency responsible for the result and interconnection with all other agencies, but no single agency is willing to undertake new and unknown responsibilities.

Weak intergovernmental cooperation between agencies and use of information and communication technology (ICT). To use well-structured beneficial ownership data, it is necessary to gather them from several registries, compare and verify them. Good cooperation between agencies is therefore needed, especially in ICT. Although Ukraine is quickly adopting IT tools and there is an e-document flow⁸ on a technical level within the government, most of the registries are still not integrated.⁹

Other issues become higher in priority. Ukraine is a developing country, but is advanced in beneficial ownership compared to many other countries.¹⁰ Therefore, beneficial ownership verification is often not prioritised by the decision-makers.

Beneficial ownership transparency and verification is a sensitive topic as it is so closely tied with the business interests, especially with oligarchs. The establishment of an efficient verification mechanism would make it more difficult for them to launder money¹¹ in offshore centres and reduce conflict of interest in public procurement,¹² among others. There is, therefore, resistance from such stakeholders that may influence decision-makers.

Opportunities to accelerate commitment implementation
International recognition of the commitment. This commitment is high on the international agenda, and any progress will be recognised internationally.

Ukraine has announced its willingness to join the leadership group on beneficial ownership, but has not completed all the necessary steps. If it were to join it would accelerate the implementation process.

The Minister of Justice in Ukraine has changed since most of the commitments on the beneficial ownership were made. Engaging the new minister and his deputies might positively influence the implementation.

There are commitments to OGP National Action Plan (NAP) and within the IMF memorandum with Ukraine. They can be used as an advocacy tool, especially because IMF money depends on it.

Recommendations
Complete Ukraine’s previously announced aspiration to join the leadership group on beneficial ownership.

Engage Ministry of Justice and Ministry of Finance leadership to implement the commitment and publicly show that there is a political will for advancement in this area.

Strengthen the link to public procurement and develop a mechanism for crosschecking information with the asset declaration registry.