After greylisting, FATF shifts focus to ‘hidden’ investors
The Financial Action Task Force (FATF) is working on standards that will require countries to develop registers of beneficial owners, to further tighten gaps in the fight against global money laundering.
Countries such as Botswana, which were only recently removed from the greylist for non-compliance with the FATF’s money laundering standards, will have to adopt the new beneficial ownership requirements at the same time as the other 200 or so FATF members.
A ‘beneficial owner’ is defined as a person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise is the ultimate beneficiary of a share or other securities in a company. A beneficial owner of a company enjoys the benefits or proceeds of a company or controls a company without being on record as the official owner.
“The proposals will mean that countries must set up beneficial ownership registers and this information will have to be verified and updated,” FATF president, Marcus Pleyer told a briefing after last Thursday’s plenary where Botswana was removed from the greylist. The FATF is the world’s leading multinational anti-money laundering agency.
Pleyer told BusinessWeek that while no grace period would be granted to newly compliant countries such as Botswana, the standards on beneficial ownership were only expected to apply in up to two years.
“We are currently issuing amendments for public consultation and feedback and after that, we would expect countries to adopt them, but we will not assess them on the beneficial ownership standards before the next round of assessments which is one or two years’ time,” he said.
Botswana already has beneficial ownership legislation in place through amendments made in 2018 to the Companies Act. Under these amendments, beneficial owners, including companies, are required to be declared to the Companies and Intellectual Property Authority (CIPA). The amendments stipulate a penalty of no more than five years in jail or a fine of not more than P200,000 for non-compliance.
While CIPA maintains an online register of all companies in Botswana, it is unclear whether a separate register of beneficial owners exists, as required by the FATF.
Since the amendments were passed, civic actors have lobbied for the publication of beneficial owners, saying this would enable ordinary Batswana to be watchdogs against money laundering and other corrupt practices.
Pleyer said while the FATF encouraged its members to make beneficial ownership registers public, it would not make this a mandatory requirement.
“We encourage countries to implement public registries, but bear in mind that we set standards for more than 200 countries with different legal systems and public registers may not be compatible for all countries,” he told BusinessWeek.
“We would rather say there must be a beneficial ownership system and competent authorities must have access to updated information.”
Pleyer added: “We encourage, but we don’t require public registers”.
Previously, CIPA said it was committed to enhancing the collection of beneficial ownership information.
“Beneficial ownership registry is a key tool for increasing transparency of the companies register, curbing corruption and reducing instances of money laundering and terrorism financing through identifying the real owners of registered companies,” CIPA spokesperson, Marietta Magashula told