12 countries participated in the EITI Beneficial Ownership Asia and Pacific Regional Workshop in Manila
The EITI, Asian Development Bank (ADB) and Asian Development Bank Institute (ADBI) hosted the Beneficial Ownership Regional Workshop in Manila on 19-20 March. Around 70 participants from 10 EITI countries in the region were represented, including Armenia, Indonesia, Kazakhstan, Kyrgyz Republic, Mongolia, Myanmar, Papua New Guinea, Philippines, Tajikistan and Timor-Leste, as well as Azerbaijan, Uzbekistan and the ADB.
Improving beneficial ownership transparency in the Asia and Pacific region is key to addressing corruption risks in the extractive sector, improving the business climate, avoiding conflicts of interests for politically exposed persons (PEPs), and preventing the use of shell companies from perpetrating illicit financial flows, money laundering and bribery. According to the 2016 EITI Standard, EITI countries are required to ensure that companies that have participating interests in extractive assets in their country should disclose beneficial ownership information by 1 January 2020. This includes the name, nationality and country of residence of natural persons who ultimately own these companies.
The approaching deadline for these disclosures highlights the need for greater cross-sectoral, cross-jurisdictional collaboration between government agencies tasked to implement beneficial ownership reforms.
The Learning Journey: Building capacity of beneficial ownership transparency practitioners
In Jakarta in October 2017, over 300 practitioners from 50 countries – including government officials charged with establishing registers and collecting and disseminating beneficial ownership data, as well as journalists, activists and other key users and champions – participated in the EITI Global Beneficial Ownership Conference organised by the EITI. Much of the focus there was on understanding the basic concepts of beneficial ownership, including definitions, thresholds and politically exposed persons.
In 2018 the discussion evolved. At both the Beneficial Ownership Asia Regional event in Tbilisi in July and the South East Asia regional event in Jakarta in November 2018, the focus was more on the establishment of legal frameworks.
At last week's Manila event, participants turned their attention to the practical issues of collection and use of the data, implementing data standards, the verification mechanisms, identifying politically exposed persons, how to work across agencies and how to catalyse and protect investigations.
At all these events, the emphasis was on peer learning and the development of good practices.
Progress in Asia and Pacific
Countries in the Asia and Pacific region have made varying degrees of progress in beneficial ownership disclosures. Indonesia, Kazakhstan, the Kyrgyz Republic, Myanmar and the Philippines are in the preliminary stages of creating beneficial ownership registers, at the national or sectoral level. Other countries are collecting information either as part of the EITI process or on an ad hoc basis.
Key takeaways from the Beneficial Ownership Regional Workshop in Manila
Collecting beneficial ownership data
The recent event in Manila addressed a number of questions regarding the collection of beneficial ownership data, such as:
Who provides the information and how? This ranged from online inputs into a company registers (UK) and mining and/or petroleum registers (Indonesia, Kazakhstan and Kyrgyzstan), to digital or hardcopy regular company filings (Mongolia and Philippines), EITI reporting (PNG) and ad hoc data collection.
How to collect information on politically exposed persons? The countries all had definitions of differing clarity but few had reliable systems for collecting accurate data.
What are the verification processes? This includes attestation and notarisation. Many advised undertaking risk assessments for different sectors, asset classes, categories or sizes.
What sanctions should be in place for failing to submit or putting in incorrect information? Countries are establishing systems that sometimes involve criminal prosecution and significant fines. In most cases, revocation of license and/or registration would be a consequence.
Publishing beneficial ownership data
Indonesia and the Philippines are in discussions about whether to charge access fees for using beneficial ownership data. In the Philippines, for example, a cost is raised for each time a search is made, which restricts exploring wider ownership. In other jurisdictions, there are data protection regulations and security concerns which need to be considered.
Demanding beneficial ownership data
One statistic stands out: since its publication, the UK’s beneficial ownership register gets an astonishing 2.2 billion hits a year. This shows its value to banks, lawyers, investors, tax collectors, companies, journalists, researchers and enforcement agencies, among others.
Open data is key to following the money
OpenOwnership has developed a data standard that is designed to ensure that beneficial ownership registers can “speak to one another”. This allows enforcement and tax agencies to follow ownership from one jurisdiction to another. The Data Standard establishes the data which should be collected and formatted, including unique data identifiers.
Linking efforts with existing asset disclosure mechanisms for politically exposed persons
Identifying PEPs who are involved in extractive operations is critical to ensure that there are no conflicts of interest in issuing licenses and that public officials do not abuse their authority in regulating extractive companies. While some countries – including Armenia, Indonesia, Mongolia and Ukraine – have good asset disclosure practices, linking these with beneficial ownership disclosures is key to addressing corrupt practices of public officials related to the extractives. Triaging information, for example, is a good way of verifying the accuracy of these disclosures.
We are nine months away from the EITI deadline to publish full beneficial ownership information in the extractives in 52 countries. Whilst it is clear that comprehensive, reliable and useable data will be a tall order for most, the pace of the improved sophistication of the debate alongside significantly improved data collection is clear and evident. Many countries in Asia are leading the way, and the international and national communities willing to help them are growing.