Achievements and Challenges in Disclosing Beneficial Owners in Ukraine

This week, the 9^th session of the Conference of the State Parties to the United Nations Convention against Corruption is held in Egypt. Andrii Borovyk, executive director of TI Ukraine represented Ukraine at the session dedicated to disclosing information about beneficial owners. Here are the main theses of his speech.

Ukraine has disclosed information about the beneficial ownership of all companies at the same time. This is to some extent a new approach because most countries have disclosed this information gradually — starting, for example, with companies in the extractive industry or the media.

As of recently, all companies in Ukraine must submit data on beneficial owners when performing any registration action. On the one hand, we have taken a big step in disclosing these data to everyone, and on the other hand, we have several current problems.

• The quality of the data entered is questionable
• There is currently no identification and verification system
• The penalty for failure to provide information is insignificant, and there is simply no responsible government body that would impose penalties for submitting false information.

Ukraine has already started to solve the problem with data quality. The Ministry of Justice issued an order according to which data on beneficial owners must be entered in separate fields (until now they were submitted in the same field with the founders and legal owners) and comply with the open data standard, that is, a machine-readable standard.

However, to achieve the goal — to make data about owners not only open, but also convenient to use, we need to:

1. Ensure synchronization of registers, that is, to introduce automatic “internal” data verification. As part of the Open Government Partnership, Ukraine has committed to verifying data on ultimate beneficial owners. The “homework” has already been done — an audit of existing state registers and databases showed that the owner identification and verification system should cover information from 50 data sets maintained by 21 government bodies. What is left to do is to set up verification in such a way as to see both the ultimate owners of assets, and the relationships between such persons, and the presence of influences on and on the part of the beneficial owner.
2. Streamline the matter of “beneficial owners in civil society organizations” (in fact, the idea was to identify the links of such organizations with politicians and parties.) Civil society organizations did not have time to submit this new information within the specified time frame. The government has committed itself to creating conditions for submitting information online, but has not yet developed such a tool.

As for the international dimension, the world should move towards creating a single global register of beneficial owners. However, to ensure its correct functioning, it is necessary to develop a unified approach to identifying owners.