Beneficial ownership transparency is emerging as a global norm. Over 100 countries have made commitments to establish public registers with data on the true owners of companies. Many have undertaken reforms and disclosures since the EITI Standard introduced a requirement on disclosing ownership information for extractive companies. Yet countries in Latin America and the Caribbean have been slow to make progress in this area. Only two countries – Cuba and Paraguay – have public beneficial ownership registers. Several others comply with recommendations from the Financial Action Task Force (FATF) to collect information on beneficial owners on a limited scope of economic actors, but their registers are not publicly accessible. This begs the question: what is stopping governments from making beneficial ownership information available to the public?
Status of beneficial ownership disclosure in EITI implementing and outreach countries in LAC
Trinidad and Tobago
Security: a real obstacle or a baseless pretext?
Opponents of public beneficial ownership registers in the region cite personal security as a primary challenge, contending that full transparency would put beneficial owners at risk. This issue was the reason behind the most recent Debates EITI event hosted by Opening Extractives, a programme implemented by the EITI and Open Ownership to promote beneficial ownership transparency in the extractive sector.
Regional experts on this topic examined this issue from different angles: national security, anti-money-laundering and anti-corruption. They maintained that publishing beneficial ownership information does not, in and of itself, represent a significant personal security threat; rather, security risks are part of a broader problem that is not triggered by more information being publicly available. On the contrary, they made the case that open data will strengthen the rule of law and help governments establish stronger accountability and anti-corruption mechanisms.
Guillermo Valdés, former director of the Mexican Centre of Intelligence and National Security, argued that publication of beneficial ownership data “is not a trigger factor” for extortion or organised crime. He noted that public disclosure and scrutiny of information on how companies are managed, including data on contracts and ownership structures, can strengthen governance and the rule of law and support anti-corruption efforts
According to Andrés Knobel of the Tax Justice Network, publication of beneficial ownership information is a fundamental issue for civil society organisations that work to combat tax evasion and corruption. “It is the first and possibly the only way to begin investigating and make authorities accountable when combatting these crimes,” said Knobel. While many governments administer confidential central registers, authorities often do not have sufficient resources to monitor these and detect red flags, and may themselves be involved in corrupt or illicit activities. Making registers public allows citizens and other stakeholders to examine, scrutinise and cross-check information and flag suspicious activity, especially where such illicit behaviour might span multiple jurisdictions.
Making countries safer
On the security dilemma, Andrés noted that “there are many understandable emotions since security risk is a common issue in Latin America, but there are more emotions than there is evidence.” Other countries that have experienced armed conflicts (such as Croatia, Serbia, Montenegro and North Macedonia) have public registers, and there is no evidence that such disclosures have generated more crime. Andrés pointed out that registers show the ownership and control of a company, not the personal wealth of individuals.
Verónica Grondona, Director of International Taxation at Argentina’s Federal Administration of Public Revenues, acknowledged that Argentina should introduce legal reforms to publish beneficial ownership data. She noted that beneficial owners have no limitations to sharing their own information, supporting the idea of voluntary disclosures. She further emphasised that different government organisations can benefit from verifying and cross-checking data with other registers to flag corruption risks, and acknowledged that there could be modifications to the law to make registers public in the future.
Security is a real threat for many citizens across the region. But using security risks as a justification for opacity misses the point. Security breaches, violence and crime are a consequence of a weak rule of law and law enforcement. Deepening beneficial ownership transparency can attract additional resources, from civil society and other institutions, to combat corruption, prevent organised crime and promote a fair business environment. Programmes like Opening Extractives can help countries move forward in this agenda, identifying risks and policy paths, and providing technical assistance when needed. Beneficial ownership transparency is not a security risk. By combatting corruption, it makes countries safer.