Jakarta (Indonesia), 25 March 2021 - A strong anti-corruption framework requires the ability of States to identify the true owners of corporate vehicles to expose money laundering and address conflict of interests. According to Global Financial Integrity, the state of financial transparency is a significant concern in much of Asia, with the continent as a whole responsible for more than one third of global Illicit Financial Flows (IFF). To catalyze change, greater awareness is needed around the specifics of beneficial ownership, recently the subject of a UNODC webinar and study.
Indonesia is the only country in the region to have established a central registry of beneficial owners, following the enactment of Presidential Regulation No.13/2018. All types of corporations are required to report to the registry, which is hosted by the Ministry of Law and Human Rights. The regulations allow for the sanctioning of non-compliant companies, and require beneficial ownership information to be updated annually.
On 25th March 2021, the Directorate of General Law Administration of the Ministry of Law and Human Rights of Indonesia held a Training of Trainers (ToT) on Beneficial Ownership Transparency , with input from UNODC. In particular, the training sought to build the capacity of regional offices of the Directorate when it comes to improving the state of financial transparency.
At the event, the Minister of Law and Human Rights explained that the Government of Indonesia is committed to maintain a positive investment climate and to prevent money laundering and terrorism financing in the private sector through Presidential Regulation Number 13 of 2018, namely the Application of the Principles of Recognizing the Beneficiary of the Corporation in the Context of Prevention and Eradication of Money Laundering and Terrorism Funding Crimes.
Putri Rahayu Wijayanti (National Anti-Corruption Coordinator for UNODC Indonesia) outlines the importance of beneficial ownership in preventing corruption
As part of her presentation, Ms. Putri Wijayanti from UNODC explained that, in addition to preventing the use of corporate vehicles for corruption, money laundering and terrorist financing, the development of a strong beneficial ownership regime made sense from a business and good governance perspective. This is encapsulated in the finding from EY’s 14th Global Fraud Survey (2016), which shows that 91% of business leaders consider it important to know the beneficial ownership of entities with whom they do business.
Effectiveness criteria of a beneficial ownership regime may include the possibility of obtaining information quickly, the mechanism fulfilling the regulatory/supervisory functions and the possibility of exchanging the information with relevant authorities domestically and internationally (OECD 2001). To achieve this, beneficial ownership systems may differ widely in their design. For instance, while some may favour the obligation of an upfront disclosure to authorities – as in the case of Indonesia – others may require corporate service providers to act as an intermediary in maintaining beneficial ownership information.
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