Transcript 13th European Commerce Registers Forum

13th European Commerce Registers
Forum
Business Registers - The Fight Against
Money Laundering &
Financing of Terrorism
ECRF Annual Conference
Budapest, Hungary
14 – 15 June, 2010
Anton Bartolo
Registrar of Companies
Malta Financial Services Authority
Business Registers - The Fight Against
Money Laundering & Financing of Terrorism
The importance of availability & access to Business
Register information
• The Green Paper on Interconnection of Business Registers
refers to the importance of:
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transparency of information
availability of information
access to up to date & official information on companies
cross border access to information on companies:
• for commercial purposes
• to facilitate access to justice
• Business Registers constitute an important & reliable source
of information
• Up to date & official information on companies is useful in the
fight against money laundering & financing of terrorism
Business Registers - The Fight Against
Money Laundering & Financing of Terrorism
Use of information held by Business Registers
• Business Registers receive, keep and make available to the public
important information and documentation about companies & their
officers
• Information is relevant for:
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the public at large
stakeholders
commercial purposes
due diligence
FIUs
law enforcement
prosecutors
• Cross border availability of up to date & official information on
companies is a very important tool in the global fight against cross
border money laundering & financing of terrorism
Business Registers - The Fight Against
Money Laundering & Financing of Terrorism
What information do Business Registers keep?
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Business Registers in the EU receive, retain and make available to the
public:
– core information as required by European legislation
– other information specific to national requirements
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Beyond the core requirements there are differences eg.:
– information /documentation on shareholders?
– information / documentation on beneficial owners?
– available to the public or at least to law enforcement?
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Is there scope for further harmonisation, co-ordination of information?
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Benefits of cross border access to more comprehensive & equivalent
information:
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saves time and costs
better use of resources
reduces need for formal international requests for information
more efficient investigations
Increased success in prevention, detection and punishment of crime
Business Registers - The Fight Against
Money Laundering & Financing of Terrorism
Companies are convenient vehicles used by criminals
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This is clearly stated by the FATF in the introduction to the 40
Recommendations:
“In recent years the Financial Action Task Force (FATF) has noted increasingly sophisticated
combinations of techniques, such as the increased use of legal persons to disguise the true ownership
and control of illegal proceeds, and an increased use of professionals to provide advice and assistance in
laundering criminal funds.”
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Typical criminal use of companies:
– Money laundering
– Terrorist financing
– Bribery & corruption
– Insider dealing
– Tax fraud
Hiding the source of funds & true beneficial owner
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The FATF standards indeed require (Recommendation 2):
– Criminal liability should apply to legal persons where possible, in addition to civil and
administrative penalties
– Legal persons should be subject to effective, proportionate and dissuasive sanctions
Business Registers - The Fight Against
Money Laundering & Financing of Terrorism
Why are companies attractive to criminals?
• Easy & simple procedures to register and dissolve, often with
minimal information required
• Make possible complex ownership structures with a cross border
dimension
• Shell (Brass Plate) companies without any form of physical
presence or activity are ideal vehicles for financial transactions
• Ready made shelf companies are available as a “same day service”
• Nominee shareholders & nominee directors
• Bearer shares
Nothing fundamentally wrong with the above when companies are
used for legitimate business
Business Registers - The Fight Against
Money Laundering & Financing of Terrorism
Business Registers play a significant role in due diligence
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FATF customer due
(Recommendation 5):
diligence
requirements
for
legal
persons
– verify the legal status of the company
– obtain proof of incorporation / evidence of establishment
– obtain information on the name, legal form, address, directors, legal
representative
– verify the identity and authorisation of a person acting on behalf of a company
– understand the ownership & control structure of the company
– identify the beneficial owner
– identify the natural persons with a controlling interest
– identify the natural persons who comprise the mind & management
“The relevant information or data may be obtained from a public register...” Rec. 5, IN.
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Considerable information is available from Business Registers
Business Registers - The Fight Against
Money Laundering & Financing of Terrorism
What are we expected to do?
• FATF Recommendation 33:
“Countries should take measures to prevent the unlawful use of legal persons by
money launderers. Countries should ensure that there is adequate, accurate and
timely information on the beneficial ownership and control of legal persons that can
be obtained or accessed in a timely fashion by competent authorities. ...”
..... a relatively general statement which is very significant
• FATF Methodology suggests possible mechanisms to ensure
transparency of BO & control:
“A system of central registration (or up front disclosure system) where a national
registry records the required ownership and control details for all companies ....”
• The times when the identity of ultimate owners was secretly veiled
behind opaque layers of companies, trusts and nominees are gone
– at least for competent authorities & law enforcement
Business Registers - The Fight Against
Money Laundering & Financing of Terrorism
To conclude
• The ability to obtain and share information on
companies and their beneficial owners is
essential for the prevention, detection and
punishment of crime
• Business Registers have their own role to play in
the fight against money laundering and financing
of terrorism
Business Registers - The Fight Against
Money Laundering & Financing of Terrorism
Thank You
ECRF Annual Conference
Budapest, Hungary
14 – 15 June, 2010
Anton Bartolo
Registrar of Companies
Malta Financial Services Authority