At the recent Financial Action Task Force’s (FATF) on 19 – 21 Oct 2016 in Paris, the issue of beneficial ownership was once again identified as critical. Formal rules relating to ultimate beneficial ownership (UBO) were added to the Australian AML/CTF Rules 2007 on 19 May 2014.

“Demonstrated effectiveness” is now a requirement expected by FATF.  In your world within the financial services sector FATF may not be a well known organisation.  However, FATF place expectations upon the Australian Government and AUSTRAC is the agency charged to see those expectations are met.  Therefore, if FATF want “demonstrated effectiveness”, you can rest assured that AUSTRAC will require the same of you during any compliance assessment.

It is clear that the international community feels that current efforts are not fully effective. This leaves us wondering what else can be done, and by what measure will demonstrated effectiveness be measured?

Whatever your organisation is currently doing to seek the UBO of trusts and companies is likely to fall-out of the FATF expectations.

A heads-up that this is possibly something that you should start looking at as a potential non-compliance agenda item at your next AML/CTF risk meeting.

Below is some more information provided by FATF for your consideration.

 

FATF work to improve transparency and beneficial ownership information

Improving transparency and beneficial ownership has been a focus of the FATF since 2003.  The FATF standard on beneficial ownership was strengthened in 2012 to address vulnerabilities such as bearer shares and sets out comprehensive measures to ensure transparency and to prevent the misuse of corporate vehicles.  Over the years, the FATF has developed a comprehensive body of guidance and research on this issue.

Today, the FATF standards on beneficial ownership remain and are recognised as the gold standard globally. Nevertheless, recent developments, as well as the review of the first nine assessments in the fourth round of mutual evaluations, reveal that countries are still not fully and effectively implementing the measures to prevent the misuse of companies, trusts and other corporate vehicles. Building on its existing work, the FATF will undertake the following work to better understand the risks and to improve the effective implementation of the international standards on transparency:   

• Undertake a detailed study on the risks and the mechanisms that are used to hide and obscure the beneficial ownership of companies, trusts etc, including by focussing on the role played by professional intermediaries.
• Prepare a horizontal study on the effective supervision and enforcement of beneficial ownership obligations, to review the different models that countries can use to exercise oversight of gatekeepers and ensure they are properly applying the FATF requirements.
• Focus on beneficial ownership in the follow-up processes to FATF mutual evaluations.
• Provide clear and consistent recommendations to assessed countries on how to improve effective implementation of beneficial ownership requirements.

Enhance co-operation between the FATF and the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) to reinforce each other’s work to improve transparency in relation to beneficial ownership.

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