The Financial Action Task Force (FATF) released important new guidance in 2022 on beneficial ownership transparency in order to combat money laundering and terrorist financing. The guidance focuses on Recommendation 24, which calls for countries to ensure that adequate measures are in place to identify, assess, and understand beneficial ownership of legal entities.
The new guidance is part of the AML-KYC process and emphasizes the importance of having a comprehensive and accurate beneficial ownership register that is accessible to law enforcement and other relevant authorities. It also stresses the need for countries to collect and verify beneficial ownership information from a wide range of sources, including company registries, financial institutions, and other government agencies.
In addition, the guidance encourages countries to take a risk-based approach to identifying beneficial owners and to prioritize the identification of those who pose the greatest risk of involvement in money laundering or terrorist financing. This includes identifying politically exposed persons (PEPs) and their associates, as well as those who are involved in high-risk industries or activities.
The FATF also recommends that countries require legal entities to disclose their beneficial ownership information to relevant authorities and to update this information on a regular basis. This can be done through mandatory reporting requirements or by requiring legal entities to maintain their own beneficial ownership registers.
The guidance also highlights the importance of international cooperation and information sharing in combatting money laundering and terrorist financing. It encourages countries to share beneficial ownership information with each other and to collaborate on investigations and enforcement actions.
The FATF recognizes that implementing effective beneficial ownership transparency measures can be challenging, particularly for developing countries and small island states. To address these challenges, the guidance includes a number of practical recommendations and examples of best practices.
For example, the FATF suggests that countries use technology and automation to streamline the collection and analysis of beneficial ownership information. It also recommends that countries provide training and resources to relevant authorities to help them identify and verify beneficial ownership information.
Overall, the new FATF guidance on beneficial ownership transparency is designed to help countries better identify and combat money laundering and terrorist financing. By encouraging the use of a risk-based approach, promoting international cooperation, and providing practical recommendations for implementation, the guidance aims to support countries in their efforts to create a more transparent and accountable financial system.
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