impact of BOT on corruption, money-laundering and other illicit flows from the outset of implementation.
2.5 How those who want to hide their activities respond when there is BOT? Inevitably, corrupt actors and other criminals will try to stay one step ahead of efforts on BOT. Registries and other systems will need to adapt to respond to this. For example, in the UK, Companies House has “developed systems to allow more types of business to file information about their People with Significant Control (PSC)”. Requiring PSC information for Scottish Limited Partnerships (SLPs) “has made SLPs much more transparent, helping law enforcement in their fight against economic crime”68. In order to build a stronger evidence base on the impact of BOT on incentives for corruption and other illicit flows, it may also thus be useful to developing more sophisticated techniques to map the origin and direction of investment and illicit flows for different locations as they implement BOT.
The business case for BOT Business risks Scrutiny of the role of “anonymous” companies69 and complex corporate structures is set to increase as international institutions, governments, parliamentarians, regulators, civil society campaigners, the media and ordinary citizens seek greater accountability for the important role that business plays. Pressure to end the role that anonymous companies play in corporate structures started in the extractive sector, now includes the financial sector and is spreading to the wider economy. This scrutiny from international institutions, governments, civil society and others results from concerns over a number of issues that have undermined trust in companies. These issues include not only corruption but also tax avoidance, conflicts of interest, governance weaknesses and transfer mispricing. Anonymous company ownership poses commercial, political and social risks to reputable firms in any sector. These risks can reinforce each other to create the potential for significant adverse impacts on the ability of reputable firms to operate in or enter certain markets. As scrutiny increases, some governments, legislators and regulators are growing increasingly suspicious towards commercial transactions that involve jurisdictions which allow companies to hide their ownership and tax position. Overall, the suspicion over “anonymous” companies and the scrutiny that it engenders risk eroding trust in companies and causing considerable damage to their reputation and standing in society. The commercial risk to companies goes beyond becoming entangled in unethical or illegal activities but could result in exclusion from whole markets or classes of business. As suspicion of transactions that involve “secrecy jurisdictions” increases,
68
Companies House 2018. “Anonymous companies” is a term now widely used, especially by civil society, to describe companies where the ownership structure is opaque and it is difficult to identify beneficial owners and sometimes legal owners through publicly available information. As a less technical term than “ultimate beneficial owner” some stakeholders also fine this helpful to explain this concept to non-technical readers who are interesting in measures to tackle corruption or tax evasion. 69
43