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Strengthening new norms in beneficial ownership transparency in Asia and the Pacific Region

During February, beneficial ownership was top of the agenda in the Asia and Pacific region. Despite turbulence in global financial markets, and challenges in disclosures and market pricing heavily linked to the impact of COVID-19, the region has taken great steps in supporting the acceleration of economic recovery through beneficial ownership reforms. In some EITI countries in the region these reforms ensure the availability and use of beneficial ownership data for effective governance in the extractive sector. 

Impressive strides have been made in Indonesia, where the implementation of a 2018 Presidential Regulation  has resulted in legal entities declaring the identity of beneficial owners and provide information on the details of their ownership. In the Philippines, all corporations registered with the Securities and Exchange Commission (SEC) have been required since 2019 to disclose their beneficial owners in annual reports to the Securities Exchange Commission (SEC) . Regulation mandated corporations to fill out a beneficial information declaration form.

A three-day workshop, organised by the EITI in partnership with the Asian Development Bank (ADB), spurred informative discussions among beneficial ownership (BO) practitioners about best practices, common challenges and impactful solutions. The main themes that came up in discussion were the various challenges in verifying BO data and adopting global beneficial ownership data standards. The need to verify and regularly update data should be the core mandate of governments. This can be achieved through robust verification processes and periodic update requests from listed entities.

John Versantvoort, ADB’s Head of Anticorruption and Integrity, stated that ensuring the transparency of the beneficial ownership of corporate entities has become an essential tool in the fight against financial crime. EITI Executive Director Mark Robinson emphasised the need for more robust BO data collection systems as a tool to fight corruption in revenue management especially as the resource rich region aims to recover from the economic impact of the pandemic. Gay Ordenes, EITI Asia Director and Anti-Corruption Lead, further highlighted the role of public access to beneficial ownership registers in enabling data verification, enhancing data quality and supporting data analysis.

On the back of the ADB workshop, an event organised by the EITI and Open Ownership under the Opening Extractives Programme engaged extractive companies in conversations on the importance of BOT disclosures for companies, the challenges of disclosing beneficial ownership information and how these are being addressed at the global and country levels. The event came on the heels of the recently revised Expectations for EITI supporting companies and built on progress made in increasing company transparency internationally through the EITI since 2018, when the Expectations were first agreed.

Following a recent revision of the Expectations, companies supporting the EITI will be expected to publicly declare their support for the disclosure of contracts, licenses and information on the beneficial owners of companies across all EITI implementing countries. They will commit to public disclosure of their beneficial owners and to contributing to public disclosure of contracts and licenses in EITI countries in a way that is consistent with government procedures. The event provided a platform for companies in Indonesia and the Philippines, as well as those that operate in other EITI implementing countries, to share examples of initiatives relating to beneficial ownership transparency and exchange insights on advancing beneficial ownership transparency within their existing mechanisms.

Key insights from Sophie Donszelmann, Senior Programme Officer at the International Council on Mining and Metals (ICMM), reinforced the benefits of BO disclosures for companies, describing how they can enhance trust and foster good mineral resource governance. Muhklis Ishak, Vice President of Freeport Indonesia spoke about the devastating impact of illicit financial flows on Asian economies, and the subsequent reduction in funds for economic development. Joan Adaci from Oceana Gold in the Philippines stressed the importance of beneficial ownership transparency in assessing standards, compliance, principles of good mining practice and how disclosure information can avoid corrupt practices. Company involvement in BO transparency not only helps to detect possible money laundering, but also facilitates efforts to detect conflicts of interest involving politically exposed persons, improve compliance and strengthen due diligence processes.

As next steps, participants from the region affirmed that more needs to be done in engaging companies in beneficial ownership reforms. Indonesia and the Philippines offer interesting similarities in regulatory frameworks for disclosing beneficial ownership information and in the experience of attaining robust participation from the extractive companies. Progress in both countries demonstrates the importance of private sector leadership alongside government and civil society efforts to support beneficial ownership reforms. 

Recordings and presentations available here.