Beneficial Owners disclosure by Anisa Deda

Beneficial Owners disclosure by Anisa Deda

The EITI Board agreed in February 2013 that following a period of testing and learning, the EITI should, in the future, require disclosure of beneficial ownership in oil, gas and mining companies operating in implementing countries. With the adoption of the 2016 EITI Standard, and in particular Requirement 2.5, the EITI Board has agreed that by 1 January 2020, all implementing countries must ensure that corporate entities that bid for, operate, or invest in any extractive assets disclose the identity of their beneficial owners. The EITI Standards also require that any “politically exposed person” who is a beneficial owner must be identified by 1 January 2020.

In this context, all the EITI countries, including Albania, published in January 2017 the BO Roadmap, in which each country has listed the expected activities, resources and responsibilities that will enable full disclosure of the Beneficial Owners by 2020.

A beneficial owner is the natural person(s) who directly or indirectly ultimately owns or controls company’s shares or voting rights, or who otherwise exercise control over the company or its management.

Not everyone wants to be identified as the beneficial owner. Corrupt individuals often set up companies to use as fronts for illegal activity, such as tax evasion, organized crime, corruption, money laundering and even terrorism activities. Companies can be set up to keep the true owner anonymous – the one who controls and profits from the company –, and this can be done in a lawful appearance. One anonymously owned company can own a second company, which owns a third company, and so on – making it difficult for law enforcement agencies to unravel and find out who is really behind these companies.

The only way to end the problem of anonymous companies is by providing public, free access to beneficial ownership as open data. This ensures that business and civil society can make use of this data for due diligence or investigations.

All of this represents a new step towards transparency and the introduction of public registers on the ultimate beneficial ownership of companies and other entities.

Among the EITI countries that have published registers on Beneficiary Owners Data are the United Kingdom and Ukraine. The United Kingdom has established the world’s largest national public register of beneficial ownership. This register is public and covers all economy sectors.

Ukraine established the world’s first public beneficial ownership register of legal entities, as well as an asset register for government officials. In 2014, the government adopted legislation on beneficial ownership disclosures for all companies. Since then, about 70% of companies have reported their beneficial owners, including companies in the extractive industries. The data is publicly accessible through a unified company register hosted by the Ministry of Justice.

EITI International Secretariat to promote this global initiative, in partnership with the Government of Indonesia organized the International Beneficial Ownership Conference in Jakarta, Indonesia, on 23-24 October 2017, Opening up Ownership Global Conference. The conference was attended by representatives from 52 countries, who discussed on the practical and necessary steps to be followed up to the full disclosure of the true owners of companies with a particular focus on the oil, gas and mining industries.

One year later, on October 31 – November 2, 2018 in Dakar, Senegal was held the International Conference on Beneficial Ownership Disclosure (Disclosure of information on the Real Owners of Extractive Companies), organized by the EITI International Secretariat based in Oslo, with the support of the Governments of the UK, France, Senegal and Denmark. The Conference was attended by more than 200 representatives from over 30 countries and National Secretariats. The conference, with focus on the international process regarding the Disclosure of data on Beneficial Ownership in the Extractive Industry, served as a broad platform to discuss and elaborate globally coordinated actions and policies which aim at the finalization within 2020 of all processes related to the collection, publication, verification and use of Beneficial Ownership information, in compliance with the terms agreed by the EITI member countries.

Through the publication of the Public Register of Beneficial Owners it is intended to improve the investment climate, more security for businesses, investors, employees and consumers by trusting domestic companies, as this will recognize who they are facing and with whom they are working really, assistance in addressing fiscal evasion, money laundering and terrorist financing, as well as revenue growth for national economies, with a positive impact also on social and environmental aspects.

Albania in the EITI 2015 and 2016 Reports, published respectively in February 2017 and February 2018 has requested a voluntary declaration of Beneficial Ownership (BO) for the reporting companies. In 2015 EITI Report from 134 reporting companies, 31 provided details on legal and/or beneficial owners and in 2016 EITI Report from 141 reporting companies, 32 provided details on BO.

Albania has made little progress with respect to the issue of regulation of certain elements of BO, based on Law No. 9917, dated 19.5.2008 “On prevention of money laundering and financing of terrorism “, is treated narrowly the concept of BO, the beneficial owner. This is a good point of reference for further initiatives in this direction on Beneficial Owners full disclosure. EITI Albania will in the lead up to 2020 consider issues related to establishing an institutional framework for disclosure, defining the scope and level of details of disclosures and developing efficient data collection and assurance procedures, until the realization and publication of the Beneficiary Owners Register. In this process will be included Albanian Government, relevant Ministries, General Directorate of Taxation, General Directorate of Customs, extracting industry companies, civil society, etc.

Meanwhile the Government of Albania is in process of introducing new regulatory changes to ensure full disclosure of beneficial owners by 1 January 2020. EITI Albania has drafted the Law on Transparency, including the Declaration of Beneficiary Owners, which is in the consultation phase with the respective Ministries until its approval, aimed within 2019.

EITI Albania will develop awareness-raising activities related to the disclosure of Beneficial Owners with all stakeholders. Also in the focus will be awareness raising and media training seminars for local journalists, because through them it is aimed the wide public awareness on the development of this process and its importance.