Money laundering and financial crime: a transparency framework

23 June 2020: an IFAC report reviews various approaches to beneficial ownership transparency.

In the effort to combat money laundering and other financial crime, ICAEW has contributed to an IFAC report which considers several approaches to beneficial ownership transparency.

Transparency can come in several forms. To date, those under the spotlight include: company-based beneficial ownership registers, centralised beneficial ownership registries (with varying degrees of access) and “using existing information”.

Whatever is the right medium for providing transparency, the International Federation of Accountants (IFAC) is clear in its introductory statement about the report: “The fight against financial crime is too important not to get it right.”

It points out that timely access to accurate beneficial ownership information plays a critical role in identifying, preventing and prosecuting money laundering, terrorist financing and tax evasion, among other financial crimes. How best to do this and remain consistent with global standards is now the question. IFAC aims to bring together views, including those of accountants, to do just this.

This is no small problem, and this only adds to the impetus to get the approach right. As IFAC points out, estimates of the scale of financial crime are in the range of US$1.4trn to US$3.5trn annually. The approach taken by jurisdictions around the world to transparency will likely make all the difference to reducing these numbers significantly.

ICAEW has put forward several points to be taken into account in IFAC’s report and its submissions to policymakers. Commenting on ICAEW’s work in this area, Sophie Wales, ICAEW’s Head of Ethics and Economic Crime, says: “Our submissions are focused on a proportionate collection of beneficial ownership data, balancing the prevention of crime with the privacy and safety of private individuals.

Verification of key identity information is then critical to enable professionals and law enforcement to rely on registers of beneficial ownership.”