Beneficial Ownership: Update on U.S., Canada, and EU Rules

March 2, 2020

Legislation and regulations around beneficial ownership information is changing across various jurisdictions: Private registry? Public registry? Access? Information collected? Obligations? Privacy? – there are many issues and aspects to consider.

In this webinar, James Cohen, Executive Director at Transparency International (TI) Canada, provides an overview of current corporate transparency regulations across various jurisdictions and the status of their implementation. He will pay special attention to the progress that has been made in Canada – both at a provincial and federal level. Finally, James outlines the framework that TI Canada has set forth for a made-in-Canada registry and the reasons for their position.

 


Here are the questions and answers from the event.

 


Q: What is that Transparency International Canada is asking for?

A: We want to see a centralized, publicly accessible registry of beneficial ownership within Canada where all jurisdictions can feed their information. We would also like to see beneficial ownership disclosure in real estate transactions. We want to see verification of that information. Any registry would need strong enforcement and sanctions within it. We also want to see strong sanctions that criminals don’t see is just the cost of doing business.

 

Q: Why a public registry? Why does it need to be accessible?

A:  We believe it is a deterrent effect and an example of this is Scottish limited Partnerships within the UK that up to 2015 were not required to disclose ultimate beneficial ownership.

They were being used by a number of entities coming from known secrecy jurisdictions such as Cyprus or Malta. But the second they became public, there was an 80% drop off in registry of Scottish limited Partnerships.

 

Q: What about publicly traded companies? Should they be required to register?

A: I would say yes for board members of publicly traded companies. This is often a public information. And the idea is that this is to distinguish between individuals. This is why we would call for unique identifier numbers so that people on a registry can be more easily identified with less and less of their information being known.

 

Q: How do you feel about public registries having confidential information available to relevant authorities, i.e. kidnapping and other safety concerns in vulnerable countries?

A: In a country like Canada, there is a low expectation of privacy under the Charter of Rights for the information that we are asking to be disclosed. We believe in following the example set by the U.K. that on a case-by-case basis people can apply for their information to be withheld for safety reasons.

We’d note that in the UK with thousands of companies, only a few hundred applied for exemption and only about three actually got an exemption. There has not been a spike of kidnappings in the UK. For a publicly traded company, much of this information has been disclosed already.  Why should information not be disclosed just because you are in a private company?

 

Q: This is a Canadian question. How does the beneficial ownership requirements impact credit issuers who issue credit cards for a commercial business?

A: The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) has updates on credit cards. There are a number of law firms who have been posting reviews of the PCMLTFA.

I would encourage you to look through their posts to get the credit card information updates. There is also a lot of information on the FINTRAC guidance website.  And I also know that there are updates coming on cryptocurrencies.

 

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