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Moving From Words to Deeds to End Anonymous Companies

The Huffington Post The Huffington Post 13/11/2015 Dr. Mo Ibrahim
G20 © Anadolu Agency via Getty Images G20

A year ago my B Team colleagues Sir Richard Branson, Arianna Huffington, Francois-Henri Pinault, Guilherme Leal, Ngozi Okonjo-Iwaela and Paul Polman and I published an open letter to the G20arguing that exposing the corporate shell game is good for business -- and the world.

What we said then is still true today: "anonymous shell companies allow criminals and corrupt businesses and officials to hide money and evade law enforcement. Anonymous shell companies have been used to siphon off government revenues from the sale of natural resources in developing countries, while drug cartels have laundered millions of dollars through the United States using these vehicles."

The G20 took an excellent first step a year ago by adopting High Level Principles for Beneficial Ownership Transparency -- committing to require that companies disclose their owners so that corruption and impunity can be reduced and competitiveness and transparency in business improved.

The Transparency International report Just for Show? Reviewing G20 Promises on beneficial ownership published this week shows clear gaps in the current regulation of beneficial ownership in many G20 countries. Fifteen out of the G20 members have an average or weak legal framework for beneficial ownership transparency when their current laws and regulations are assessed against the ten principles the G20 Leaders adopted last year.

Transparency International highlights that G20 governments need to tighten oversight on companies, banks and the people who help the corrupt. High profile cases of corruption in the past year -- including Petrobras, Viktor Yanukovych, and FIFA -- demonstrate the prevalence of anonymous companies and the consistent use of professional middle men and banks to hide or launder money. Governments can also make it easier for banks, accountants, lawyers and other businesses to stay clean by identifying corrupt customers.

The gap between commitment and results is large. There is significant work for all of us to do. The G20 governments have started to move, producing action plans for their implementation that are published this week. Some are moving faster than others, with the UK Central Registry set to go online in 2016.

We believe there is a strongbusiness case for beneficial ownership transparency: it increases competitiveness, reduces risk by allowing businesses to know who they are doing business with, helps manage financial exposure and increases the stability of the financial system. Lastly, for bad actors, it reduces impunity, allowing law enforcement to track them down and hold them to account for corruption and crime.

Along with our colleagues through the B20 we are continuing to identify business use cases for beneficial ownership transparency and to work to put these into practice. A workshop of thirty companies in Paris in June articulated a first 15 use cases -- now available in a new report. These use cases go beyond knowing your customer and knowing your partners, to being able to see systemic risks around ownership in corporate groups and value chains, addressing employee and investor concerns, and dealing with specific cases to do with specially designated persons, public procurement projects, localization requirements and shipping transport. We invite all interested businesses tobecome involved in these discussions, currently planned for Nairobi, Dehli, London, New York, Beijing and Panama in coming months.

A year after our letter to the G20, we remain committed to getting this job done, working with G20 governments and we welcome the steps by G20 governments to turn their commitments into real results.

In 2016 we hope to see significant action on beneficial ownership transparency in G20 countries, helping to build up a global norm and standard that other countries can easily adopt.

Harmonisation is not just important between countries but also across the agenda of the G20. This year, the G20 is agreeing to two new important sets of principles -- on Procurement and Open Data. It is crucial that we connect the dots between these sets of principles to make sure that beneficial ownership disclosure is a requirement of procurement systems, and that business can access company ownership information to enable them to know who they are doing business with.

As the G20 adopts more principles, it is time for all of us to make sure we move from words to deeds on beneficial ownership transparency.

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