Beneficial Ownership Register as tool for tackling financial crimes

Illicit financial flow and proceeds of crime can best be tracked and trapped with the newly introduced Beneficial Ownership Register (BOR). This was the submission of a brainstorming session facilitated recently by the Civil Society Legislative Advocacy Centre (CISLAC). Sulaimon Olanrewaju reports.

While addressing the opening session of the 16th conference of the Committee of Intelligence and Security Services of Africa (CISSA) in Abuja not too long ago, President Muhamadu Buhari shocked his international audience with the statement that Africa loses about $60 billion to illicit financial flows (IFFs) yearly.

Illicit financial flows are illegal movements of money or capital from one country to another. This can be in form of money laundering, the use of shell company to transfer proceeds of corruption to a bank account in another country or trade mis-invoicing to evade customs duties or payment of tax.

President Buhari, who called on security agencies in Africa to tighten the loop against IFFs, blamed the rising security challenges in Africa on people who siphoned funds out of the continent illegally and use same to procure ammunition to foist unrest on the people.

According to the President, “Criminals and their collaborators cheat the system through various practices, including trade mis-pricing, trade mis-invoicing, tax abuse and evasion, as well as money laundering. Several unfair commercial agreements and illegal resource extraction by multinational companies, in cahoots with their local collaborators, also create routes for illicit financial outflows.”

Corroborating the President’s position on the ills of illicit financial flows, chairman of the Economic and Financial Crimes Commission (EFCC), Abdulrasheed Bawa, recently revealed that some car and jewelry dealers as well as real estate developers serve as conduits for money laundering.

He added that consequently, his commission had been working to strengthen its Special Control Unit against Money Laundering (SCUML) in the belief that checkmating the activities of non-designated financial institutions would reduce cases of such crimes in the country.

According to the EFCC boss while briefing the presidential communication team at the Presidential Villa recently, “If we can checkmate the problems associated with real estate, laundering of proceeds of crimes in this country will reduce.”

But both the Executive Director of Civil Society Legislative Advocacy Centre (CISLAC), Auwal Rafsanjani, and the Registrar-General and Chief Executive Officer (CEO) of Corporate Affairs Commission (CAC), Alhaji Garba Abubakar, have averred that the best way to nip illicit flow of funds and proceeds of crime in the bud in Nigeria is through the implementation and monitoring of the Beneficial Ownership Register (BOR). According to the duo, with the implementation of BOR, tracking funds from the source to the destination becomes easy.

The two said this at a media interactive session themed ‘The Anti-Corruption Potential of the Beneficial Ownership Register’, organised by CISLAC recently in Lagos.

At the London Anti-Corruption Summit and the Open Government Partnership Initiative in 2016, the Federal Government assured the international community on its preparedness to introduce the Beneficial Ownership Register in the country, but until recently nothing had happened in that regard. BOR is a global move to remove opacity in business ownership by publicly making available owners and beneficiaries of a business. This makes it impossible for those harbouring proceeds of criminality and illegality to mask their activities. CISLAC organised the media interactive session to sensitise members of the public on the initiative.

Rafsanjani, who led the discussion, said that transparency of ownership and control of companies, partnerships, trusts and other legal entities that can hold assets and open bank accounts is critical to the ability to determine where illicit funds are moving to and who is moving them.

The CISLAC boss said, “The Nigerian government has recorded significant progress in the implementation of the beneficial ownership transparency as indicated by the signing of the Companies and Allied Matters (Amendment) Act 2020 and ongoing process towards the establishment of a central register for disclosure of all corporate entities in the country that would subsume and complement the beneficial ownership register for extractive sector companies already established by the NEITI in December 2019.”

Rafsanjani said while the rapid uptake of beneficial ownership is significant, the quality, accuracy and utility of the data for its intended purpose of curbing illicit financial flows are dependent on the right legislative framework being in place and the data conforming to the beneficial open data standards (BODS).

According to the Executive Director of CISLAC, the capacity of the tax and customs authorities, policing and prosecution authorities, mandatory clause on beneficial ownership information to be provided when companies are incorporated or trusts registered, and the presence of a mandate to ensure that information provided by any entity is periodically updated and on a regular basis among others, have the capacity to hamper the effective implementation of this initiative regardless of how good it looks.

Rafsanjani also identified other challenges such as “enforcement ability to ensure that information is placed on the publicly accessible platform and modalities to verify declared information and false declarations, which should result in robust penalties.”

He added, “Let us be clear that beneficial ownership and the more general issue of money laundering is not only a Nigerian or African problem. But as long as inefficiency and the lack of political will to sanitize our systems persist, consequences in the form of terrorism financing, trans-national organized crime, tax evasion and illegal enrichment of politically-exposed persons will prevail.

“We thus seek advocacy for identifying a verification process that ensures people in the official register are authentic- that is, they are who they say they are; authorized- that is those persons have agreed to be involved in a legal entity, and that all the registered data is valid.”

Also, the CISLAC boss said the process should be a fully automated information technology system with human supervision that will have access to relevant data, held by national and foreign authorities for cross-checking and advanced analysis and could be managed by NEITI, or another body that is experienced in data analytics, such as financial intelligence units or tax authorities.

He added that “we must deploy an approach that clearly defines roles and responsibilities of various relevant stakeholders in defending the system or preventing misuse.”

In his own address, the Registrar-General and CEO of Corporate Affairs Commission (CAC), Alhaji Garba Abubakar, said Nigeria started implementing the Beneficial Ownership Disclosure on January 3, 2021.

According to him, the process was delayed till 2021 from 2016 when President Muhammadu Buhari made commitments to the anti-corruption summit in London, due to the absence of a legal framework to back it up.

“The Companies and Allied Matters Act (CAMA) 2020 was reenacted and it now provides for mandatory disclosure of persons with relevant control. The CAC is the agency responsible for giving effect to the provisions of this new law.

“Since January 3, the CAC has deployed an electronic register that covers all aspects of our registration services, and this includes the disclosure of beneficial owners.”

Abubakar said every company registered with the CAC since January 3, 2021, has been mandated to disclose its beneficial owners at the point of registration, and whenever there is any change in the information or at point of filing of annual returns.

His words, “For a new company registered from January 3 till date the information is available, if you go to www.pre.cac.gov.ng, you click on any company registered from January 3 till date; you can view that information at no cost.”

He said for companies registered earlier than that date, the disclosure will start from their next financial annual returns, and that depends on the financial end of year of each company.

“The whole essence of this is to entrench transparency and support the anti-corruption initiatives of the government, such that as a citizen, if you have reasons to believe that the information in the portal is not actually a true reflection of the ownership of the company, then you can escalate this information and report to relevant agencies for investigation,” the CAC Registrar General said.

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