Progress on identification of Beneficial Ownership

The World Bank has taken a big step forward in the fight to curtail illicit financial flows

World Bank published new 196-page report: Barriers to Asset Recovery.

The study explicitly concerns reforms that will “enable the recovery of stolen assets” as the result of corruption. It is a topic which has been given a fair amount of attention lately, particularly in the wake of the Arab Spring. Ben Ali of Tunisia, Hosni Mubarak of Egypt, and Muammar Qaddafi of Libya all hid millions of dollars abroad, money that was frozen and publicized soon after revolutions began in their (respective) countries.

The World Bank paper specifically addresses this issue and it also recommends eight strategic actions and other recommendations for policy makers, legislators and practitioners. They include the implementation of new policies and operational procedures to foster trust and mentor other jurisdictions, legislative reforms to facilitate freezing and confiscation of stolen assets, and better application of existing anti-money laundering measures.

Because criminals often use other individuals, attorneys, and legal persons to hide assets, such tools would be even more useful if they identify the beneficial owner of the account and any power of attorney related to the account . By helping to identify accounts, central bank registries speed the work of law enforcement authorities in asset recovery cases.

This is a big step forward because requiring banks to identify the beneficial owners of accounts will aid developing countries (and developed countries, too) in recovering assets from not just corrupt leaders, but also criminals, tax evaders, terrorists and other transmitters of illicit financial flows.