Beneficial ownership transparency

Improve beneficial ownership transparency: Australia will improve transparency of information on beneficial ownership and control of companies available to relevant authorities.

Completion Status:
Not fulfilled

Commitment filtering:

Specific: ✔ yes

This commitment is specific because it identifies a sufficiently narrow policy area, namely to improve beneficial ownership transparency.

Measurable: ✔ yes
Based on how the commitment is formulated, it is missing measurable actions on how Australia plans to improve beneficial ownership transparency. However further research shows that this commitment relates to commitment 1.2 in Australia’s First Open Government National Action Plan, 2016-2018.[1] In particular, the Open Government National Action Plan committed the Australian Treasury to: releasing a public consultation paper on a beneficial ownership register for companies (including the use of nominee shareholdings to conceal beneficial ownership); making recommendations on the detail, scope and implementation of a beneficial ownership register; and begin work to implement the recommendation. It can therefore be understood that this commitment is related to the measurable action of establishing a beneficial ownership registry, consistent with internationally recognised best practices, such as the recommendations from the Financial Action Task Force on beneficial ownership.[2]

 

[1] Australia’s First Open Government National Action Plan 2016-18, https://ogpau.pmc.gov.au/national-action-plans/australias-first-open-government-national-action-plan-2016-18

[2] See for example: FATF Guidance on Transparency and Beneficial Ownership, https://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-transparency-beneficial-ownership.pdf

Last updated: 30 January 2022
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Evaluation:

Independent reviews of Australia’s Open Government National Action Plans found that the government has made no progress in meeting its commitment to improving beneficial ownership transparency,1 a commitment which was first made in Australia’s First Open Government National Action Plan (2016-2018, commitment 1.2) and at the Anti-Corruption Summit in London in 2016.2 Recent media reporting suggests that Australia has backed away from establishing a beneficial ownership register.3 Such a register would be consistent with internationally recognised best practice and is what we understand this commitment would ultimately deliver. Instead, and in response to media questioning on whether the government still intends to introduce a beneficial ownership register, the government has referred to its Modernising Business Registers programme.4 This programme, which will be implemented between 2021 and 2024, will bring together the Australian Business Register and more than 30 Australian Securities and Investments Commission (ASIC) registers into one place.5 There has been no indication from the government that it will progress public beneficial ownership disclosure as part of the Modernising Business Registers programme,6 although the treasurer has said the programme would “enable the development of a beneficial ownership register”.4 Further, the use of nominee shareholdings and directors is a particular challenge to revealing who the true beneficial owners are, and there has been no change to the way these are allowed to operate in Australia.

 

Challenges to effective commitment implementation
While COVID-19 has created challenges at the public service and ministerial levels to pursue new policy reforms in some areas, including on beneficial ownership, there is a sense from some stakeholders that the government has little interest in this policy area or in making progress in this commitment.7 Stakeholders noted in interviews that there has been no substantial action since a 2017 public consultation on beneficial ownership, and research for this report was unable to identify a treasury official working on beneficial ownership transparency.

 
Opportunities to accelerate commitment implementation
Improving beneficial ownership transparency is a key tool in the fight against corruption, tax evasion, money laundering and other financial crimes. The Financial Action Task Force has a recommendation on beneficial ownership (and is considering potential changes to its recommendation);8 the EITI standard recommends that implementing countries maintain a publicly available register of the beneficial owners of the companies that apply for or hold an interest in an exploration or production licence for oil, gas or mining; and beneficial ownership transparency is on the agenda of the G20 Anti-Corruption Working Group.9 10 Each of these initiatives, of which Australia is a member or supporter, offers a platform where Australia can signal its intention to develop a beneficial ownership register. Further, the Modernising Business Registers programme potentially offers a foundation on which to develop a public beneficial ownership register. Finally, the current inquiry into the adequacy and efficacy of Australia’s anti-money laundering regime (discussed below) offers another opportunity for government to accelerate the implementation of this commitment; beneficial ownership transparency is widely recognised as a key pillar of anti-money laundering systems.11

 
Recommendations
It is recommended that Australia establish a centralised and publicly accessible beneficial ownership register for companies and trusts. Such a register should clearly define beneficial ownership, require independent verification of beneficial ownership data, close loopholes that allow anonymity (including use of shareholder nominees) and increase ownership transparency of foreign companies.12

Sources:
  1. Open Government Partnership Australia, Independent Reporting Mechanism (IRM): Australia Transitional Results Report 2018–2020, and Open Government Partnership Australia, Independent Reporting Mechanism (IRM): Australia Progress Report 2016-18
    30 Dec 2021
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  2. UK Government, Anti-Corruption Summit: country statements, 12 May 2016, https://www.gov.uk/government/publications/anti-corruption-summit-country-statements
    30 Dec 2021
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  3. See for example, Financial Review, Feds Junk Plans to Unmask Nominee Directors, 25 April 2021, https://www.afr.com/politics/federal/feds-junk-plans-to-unmask-nominee-directors-20210420-p57kru
    30 Dec 2021
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  4. Questions from Four Corners to Treasurer Josh Frydenberg  https://www.documentcloud.org/documents/21075380-response-from-treasurer-josh-frydenberg-to-four-corners
    30 Dec 2021
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  5. Australian Taxation Office, Modernising Business Registers, https://www.ato.gov.au/general/gen/modernising-business-registers/#Directoridentificationnumber
    30 Dec 2021
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  6. Transparency International Australia, Position paper A stronger corporate registry: Analysis and recommendations, April 2021, https://transparency.org.au/wp-content/uploads/2021/04/TIA-Position-Paper_-Corporate-Registers_Final-5.pdf
    30 Dec 2021
    ↩
  7. See for example Open Government Partnership Australia, Independent Reporting Mechanism (IRM): Australia Transitional Results Report 2018–2020, https://www.opengovpartnership.org/wp-content/uploads/2021/08/Australia_Transitional-Results-Report_2018-2020_for-public-comments.pdf
    30 Dec 2021
    ↩
  8. FATF, Revisions to Recommendation 24 – White Paper for Public Consultation, https://www.fatf-gafi.org/publications/fatfrecommendations/documents/white-paper-r24.html
    30 Dec 2021
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  9. See for example: G20, High-Level Principles on Beneficial Ownership Transparency, 2014, http://www.g20.utoronto.ca/2014/g20_high-level_principles_beneficial_ownership_transparency.pdf
    30 Dec 2021
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  10. G20 ANTI-CORRUPTION WORKING GROUP, Anti-Corruption Accountability Report, 2021, https://www.unodc.org/documents/corruption/G20-Anti-Corruption-Resources/Accountability-and-Monitoring-Reports/2021_G20_ACWG_Accountability_Report_2021.pdf
    30 Dec 2021
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  11. See for example: Basel Institute on Governance, Beneficial Ownership Transparency is a Pillar of Anti-Money Laundering Systems – So It Needs to Stand Up. Insights from the Basel AML Index 2021, 20 September 2021, https://baselgovernance.org/blog/beneficial-ownership-transparency-pillar-anti-money-laundering-systems-so-it-needs-stand
    30 Dec 2021
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  12. Transparency International, What the Global Standard on Company Ownership Should Look Like: Five Key Fixes, 6 August 2021, https://www.transparency.org/en/news/fatf-consultation-global-standard-company-beneficial-ownership-transparency-key-fixes
    30 Dec 2021
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