NGOs: To Curb Money Laundering, Company Owners Should be Made Public

Representatives from 205 countries and jurisdictions are meeting this week in Paris to discuss global action that can be taken to combat money laundering.  

Over 800 participants of the conference hosted by the Financial Action Task Force, FATF, will focus specifically on money laundering associated with fueling crime and terrorism. They will call on members of international organizations such as the UN, the World Bank, and the IMF to suggest what initiatives might be required to curb illicit financial flows.  

Civil society organizations that were not invited to attend the conference urged regulators to consider making beneficial ownership information openly accessible through a public registry,  according to Transparency International. 

Such a registry might help authorities track illicit financial behavior in places like Cyprus, where,  just last week, MONEYVAL, FATF’s European Council affiliate, warned that the country’s financial system remains vulnerable to foreign investments coming in from what it described as “politically exposed people.” 

MONEYVAL’s report acknowledged that it relied on investigative journalists to make such a determination -- citing findings in the Panama Papers and other “well-known Laundromat schemes,” which, presumably, were those revealed in OCCRP investigations. 

Max Heywood, head of policy at Transparency International, told OCCRP that while it was encouraging to see authorities paying attention to evidence presented by journalistic investigations that have made use of financial leaks, it would be even better if one could just check a register, instead of waiting for someone to leak the information.

After the Cyprus report was released, the anti-money laundering task force said that it would pursue “enhanced follow-up procedures.” Its secretariat explained to OCCRP that this means that it would produce more frequent reports and if the country didn’t comply, MONEYVAL could establish a “high-level mission to the country” or issue “a public statement.” 

The Cypriot Finance Ministry issued a response to the report, saying it was grateful that MONEYVAL had recognized how seriously Cyprus had taken the issue of money laundering. 

It noted that “in the technical part of the report, Cyprus presents compliance scores or high compliance in almost all 40 parameters and no non-compliance assessment.” 

“There is a difference between compliance and practice,” Heywood explained, stating that despite the fact that Cyprus complies legally with much of what international authorities require, it does not appear to have much tangible effectiveness in eliminating illegal financial flows.   

Heywood reiterated the importance of a cross-border approach, saying that the problem can’t be tackled on the level of one country.  

He said he hoped that this is what will be discussed at this week’s FATF conference, despite the fact that Transparency International representatives were not invited to attend.  

Other civil society organizations, such as Global Witness, whose members were also not invited to attend the conference, appear to share Heywood’s assessment. 

"FATF has a unique opportunity this week to revise its current weak recommendation on beneficial ownership transparency and call on all Member Governments to implement public registers revealing who really owns the companies based in those states,” Tina Mlinaric, Campaigner at Global Witness, told OCCRP. 

“Should they fail to take this step, it will leave many questioning how serious FATF is in the global fight against money laundering and corruption.”