The OECD has released a beneficial ownership toolkit, which will give law enforcement access to information on beneficial owners of companies to make it more difficult for criminals to hide illicit tax evasion activities.
The beneficial ownership (BO) toolkit is intended to help governments ensure that law enforcement officials have access to reliable information on who the ultimate beneficial owners behind a company are or other legal entities so that criminals can no longer hide their illicit activities behind opaque legal structures.
The toolkit was developed to support Global Forum members and in particular developing countries because the current beneficial ownership standard does not provide a specific method for implementing it. To assist policy makers in assessing different implementation options, the toolkit contains policy considerations that Global Forum members can use in implementing the legal and supervisory frameworks to identify, collect and maintain the necessary beneficial ownership information.
Under its toolkit, the OECD lays down the steps to identify the beneficial ownership. First, tax authorities need to look for the individuals holding ownership interests either directly or through a chain of other entities or arrangements. To the extent the owner could not be identified, the person who controls the company through other means, such as personal or financial influence, should then be identified. Only when none of the previously described approaches is able to identify a BO, a jurisdiction, as default a step, would require the identification of a senior manager of the entity.
The OECD recommends jurisdictions to adopt the legal definition of beneficial ownership in existing Anti Money Laundering Law or commercial law to make it align with Financial Action Task Force (FATF) standards. In addition to the BO definition, the OECD also urges all jurisdictions to have effective enforcement provisions in place, including adequate monitoring, as well as compulsory powers to ensure that beneficial ownership information maintained by obliged persons, entities, or others is not only kept, but is also adequate, accurate, and up-to-date.
With regard to the BO access information, jurisdictions are free to implement any method that ensures the availability of and access to beneficial ownership information as long as it is consistent with the FATF works. The Automatic Exchange Of Information (AEOI) is an instrument for tax authorities to exchange the information of BO on applicable financial institutions’ account holders and controlling persons.
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