Executive director of Transparency International Ukraine Yaroslav Yurchyshyn participated in a discussion on disclosure of information about beneficiary owners as part of the annual meeting of the International Monetary Fund and the World Bank. He spoke about the positive experience as well as the challenges that Ukraine encountered along the way.
In November 2014 Ukraine became one of the first countries in the world to adopt a law which makes it obligatory for the companies to identify their beneficial owners. This information was stored in the state registry of legal persons, private entrepreneurs and civic unions. But in order to use the registry and search the information on companies sorted by beneficial owners, one needed to pay a fee.
Public officials who submit their declarations in electronic format also have to disclose the companies where they hold the beneficial ownership, does not matter in which country the company is legally registered. Nevertheless, the search mechanism is available only by the officials’ name.
On May 22, 2017 Ukraine has signed the Memorandum among Transparency International Ukraine and the Ministry of Justice of Ukraine, the State Agency for E-Governance of Ukraine and OpenOwnership to become the first country to integrate its national central register of beneficial ownership with the OpenOwnership Register. It means that Ukraine provided beneficial ownership data to be automatically available on the OpenOwnership Register, which links beneficial ownership data from around the world.
Starting from August 2017, Ukraine has published its register on open data portal in the open data format available for everyone and the registry is updated regularly. It was also one of the commitments during the Anti-Corruption Summit in London and Paris Declaration during OGP Global Summit to open the registry. In Open Government Partnership Action Plan for 2016-2018, Ukraine made a commitment on making a better mechanism for verification of beneficial owners. The mechanism was not established, but some donors are supporting projects on the verification.
TI and Open Ownership colleagues identified a number of key areas on which Ukraine needs to focus to improve the situation with disclosure of beneficiary owners.
- Level of compliance:The current low level of compliance (less than 20% of all Ukrainian companies are accounted for) demonstrates the need for a stronger system of sanctions and robust enforcement.
- Data quality:There are currently a number of limitations that lower the quality and usability of the data collected. These include a lack of beneficial ownership data in machine-readable format, unreliable systems of disambiguation for individuals and companies, a lack of granularity in the data (in particular on the means of control), and no representation of chains of ownership.
- Maintenance of records:Currently, no information is given on when the data was submitted, and no confirmation statement is required. This makes it impossible to assess the timeliness of the data being submitted.
- Validation: There is a clear need to close possible loopholes by requiring the reporting of detailed beneficial ownership data, including by using the definition of “beneficial owner” contained in the law as a basis for creating a clear test of beneficial ownership to share as guidance.
In the panel discussion on disclosure of information about beneficiary owners Ukraine was also represented by deputy Minister of Justice Serhii Pietukhov. The annual IMF/WB meeting takes place in Indonesia. The executive director of TI Ukraine joined the meeting at the invitation of the Secretariat of the global anti-corruption movement Transparency International.