Beneficial Ownership In The Extractive Industries SectorRecommendations for reporting beneficial ownership of extractive industry companies for the new EITI Standard Technical Note prepared for Revenue Watch Institute Authors1: Michael Aryee Tulsi Byrne Kristina Hamil Rebecca Hollender Georges L. J. Labrche 9 December 2013 The New School for Public Engagement Milano School of International Affairs, Management, and Urban Policy

1 Michael Aryee , Tulsi Byrne , Kristina Hamil , Rebecca Hollender , Georges L. J. Labrche 1 2 Table of Content ACRONYMS ........................................................................................................................................5 EXECUTIVE SUMMARY .......................................................................................................................6 INTRODUCTION .................................................................................................................................7 I. METHODOLOGY ..............................................................................................................................8 II. DATA COLLECTION .........................................................................................................................9 III. DATA ANALYSIS ........................................................................................................................... 13 BENEFICIAL OWNERSHIP GAPS IN CURRENT AML FRAMEWORK .......................................................................... 13 Defining Beneficial Ownership ........................................................................................................... 13 Disclosures and Reporting of Beneficial Ownership ........................................................................... 14 Incorporation Practices ...................................................................................................................... 15 Bearer Shares ..................................................................................................................................... 15 Corporate Service Providers (CSPs)..................................................................................................... 15 Shell Companies ................................................................................................................................. 16 Limited Statutory Powers ................................................................................................................... 16 LOOPHOLES WITHIN CURRENT AML FRAMEWORK WITHIN FINANCIAL INSTITUTIONS .............................................. 17 Banking loopholes .............................................................................................................................. 17 Bank Secrecy Laws .............................................................................................................................. 17 Due Diligence ...................................................................................................................................... 17 Verification ......................................................................................................................................... 17 ENFORCEMENT AND PENALTIES OF AML REGULATIONS ..................................................................................... 18 IV. RECOMMENDATIONS .................................................................................................................. 18 1. PROMOTE STANDARDIZED DEFINITIONS AND DUE DILIGENCE PROCEDURES ...................................................... 19 Beneficial Ownership .......................................................................................................................... 19 Beneficial Ownership Thresholds ....................................................................................................... 19 Beneficial Ownership Due Diligence ................................................................................................... 20 Politically Exposed Persons (PEPs) ...................................................................................................... 20 2. TRANSPARENT INCORPORATION PRACTICES ................................................................................................. 22 CSPs: Compliance efforts Targeting Corporate Service Providers ...................................................... 22 Prohibiting Bearer Shares and Corporate Nominee Directors ............................................................ 23 3. EXTENSION OF EITI BENEFICIAL OWNERSHIP REQUIREMENTS TO PUBLICLY LISTED AND WHOLLY-OWNED SUBSIDIARIES .............................................................................................................................................. 22 4. DEVELOP A PUBLIC REGISTRY OF BENEFICIAL OWNERS ................................................................................... 23 5. CREATE ENFORCEMENT MECHANISMS AND STRICT ADHERENCE TO REPORTING ................................................. 24 CONCLUSION ................................................................................................................................... 25 APPENDIX A: RELATED/RELEVANT INITIATIVES ................................................................................. 26 STOLEN ASSET RECOVERY INITIATIVE .............................................................................................................. 26 RELEVANCE TO BENEFICIAL OWNERSHIP .......................................................................................................... 26 ASSET RECOVERY NETWORKS ........................................................................................................................ 26 OTHER LEGISLATIONS ................................................................................................................................... 27 APPENDIX B: FIGURES AND TABLES .................................................................................................. 28 3 APPENDIX C: COUNTRY NORMS AND PRACTICES .............................................................................. 31 BRAZIL....................................................................................................................................................... 31 CANADA .................................................................................................................................................... 31 FRANCE ..................................................................................................................................................... 32 ITALY ......................................................................................................................................................... 32 JAPAN ....................................................................................................................................................... 33 NORWAY ................................................................................................................................................... 33 TIMOR LESTE .............................................................................................................................................. 33 UNITED KINGDOM ....................................................................................................................................... 34 BERMUDA .................................................................................................................................................. 34 APPENDIX D: PWC ANALYSIS OF KYC GUIDELINES, EITI PILOT COUNTRIES BENEFICIAL OWNERSHIP, AND PEPS SUMMARY TABLES AND CHARTS ...................................................................................... 36 APPENDIX E: PWC ANALYSIS OF KYC GUIDELINES, EITI PILOT COUNTRIES BENEFICIAL OWNERSHIP, AND PEPS SUMMARY DETAILED ANALYSIS ........................................................................................ 39 REFERENCES .................................................................................................................................... 40 PRIMARY ................................................................................................................................................... 40 SECONDARY ............................................................................................................................................... 42 4 Figures and Tables FIGURE 1: COUNTRIES EVALUATED ......................................................................................................... 28 FIGURE 2: COUNTRIES EVALUATED, CONTINUED ....................................................................................... 29 TABLE 1: WHICH JURISDICTIONS REQUIRE COMPANIES TO REPORT CHANGE IN OWNERSHIP? ............................. 29 TABLE 2: TECHNIQUES/METHODS EMPLOYED BY PEPS TO ADVERSELY AFFECT THE EFFECTIVE FUNCTIONING OF ENFORCEMENT AGENCIES ............................................................................................................. 30 TABLE 3: AWARNESS OF FATF RECOMMENDATIONS ................................................................................. 30 TABLE 4: COUNTRIES THAT HAVE PRACTICE GUIDANCE BEYOUND THE FATF RECOMMENDATIONS ...................... 36 TABLE 5: BENEFICIAL OWNERSHIP TRESHOLDS FOR G8, BRICS AND EITI COUNTRIES ..................................... 37 TABLE 6: TABLE OF COUNTRIES THAT HAVE AMBIGUOUS LANGUAGE IN REQUIREMENTS AND DEFINITIONS OF BENEFICIAL OWNERSHIP ............................................................................................................... 38 5 AcronymsAML ATF BMA BCL BRICS CARIN CSP CFT ECOWAS EU EITI FATF FCA FI FSA FSAN G8 G20 ICAR GIABA KYC NGO OECD PEP PWC PRA SEC SOEs StAR SARs UNCAC UNODC WBGAnti-money Laundering Anti-terrorist Financing Bermuda Monetary Authority Brazilian Corporation Law Brazil, Russia, India, China, and South AfricaCamden Asset Recovery Inter-Agency NetworkCorporate Service ProviderCounter-Financing of TerrorismEconomic Community of West African States European UnionExtractive Industries Transparency InitiativeFinancial Action Task ForceFinancial Conduct AuthorityFinancial Institution Financial Services AuthorityFinancial Supervisory Authority of Norway (Fnanstilsynet)Group of EightGroup of TwentyInternational Centre for Asset RecoveryIntergovernmental Action Group Against Money Laundering In West Africa Know Your CustomerNon-governmental Organization Organization for Economic Co-operation and Development Politically Exposed Person Pricewaterhouse CoopersPrudential Regulation AuthoritySecurity Exchange CommissionState-Owned Enterprises Stolen Asset Recovery InitiativeSuspicious Activity ReportsUnited Countries Convention Against CorruptionUnited Countries Office on Drugs and CrimeWorld Bank Group 6 Executive Summary Thisproposalrecommendsmeasurestoenhancetransparencyandaccountabilityinthe extractive industries sector by addressing the question of beneficial ownership in the Extractive IndustriesTransparencyInitiative(EITI).TheEITIStandardprovidesaminimumframeworkfor improving transparency and accountability in extractive industries.2 The current standard limits beneficial ownership disclosure requirements from state owned extractive industries and does not require disclosure from publicly traded companies. EITI has made a commitment to extend itsbeneficialownershiprequirementstoprivatecompaniesthatbidfor,operate,orinvest,in theextractivesector.InordertopromotethewideningofEITIsbeneficialownershipscope, thistechnicalnoteoutlines:currentregulatoryapproachestobeneficialownership,gapsand loopholes in current approaches, and recommendations to the EITI.Given the absence of sector-specific regulations regarding beneficial ownership for non-publicly tradedcompanieswithintheextractivesector,datawascollectedbymappingthe requirementsfortransparencyandaccountabilityofbeneficialownershipsetforthbyvarious nationalandinternationalentitiesthatregulatebeneficialownershipdisclosure.Several beneficial ownership regulations found within national and international anti-money laundering (AML)andKnowYourCustomer(KYC)initiativesprovideusefulnormativeapproachesforthe EITI.InadditiontomappingcurrentnormativeapproachesofG8,BRICS,andEITIcountries, datawascollected fromPricewaterhouseCoopers(PwC)KYCQuickReferenceGuideand then categorizedintothreesub-groupsrelatingtobeneficialownershipincluding:Identity Verification,DueDiligence,andReporting.Primarydataoncurrentapproacheswasalso obtainedfrominternationalregulatorybodiessuchastheOrganizationforEconomicCo-operation and Development (OECD), international financial institutions, issue-specific coalitions, and task forces. Dataoncurrentnormativeandpractice-basedapproachestobeneficialownershipwas supplementedwithsecondarysourceanalysisinordertoidentifytheprincipalgapsand loopholesincurrentbeneficialownershipregulations,asrelevanttotheextractiveindustry sector. Major loopholes include: (1) inconsistent definitions; (2) gaps in incorporation practices; (3)bankingloopholes,suchastheabsenceofregulatedcustomerduediligencerequirements includingindependentverificationofreportedinformation;and(4)lackofreportingand enforcement mechanisms of penalties.Inordertoaddresstheloopholes,fivemainrecommendationswereidentified:(1)promote standardizeddefinitionsandduediligenceprocedures,(2)extendbeneficialownership disclosure requirements to all publicly listed companies and their wholly owned subsidiaries, (3) transparentincorporationpractices,(4)developpublicregistriesofbeneficialowners,and(5) createenforcementmechanismsandstrictadherence.Inadditiontothesefive recommendationsanextensivelistofadditionalrecommendationsisprovidedforfollow-up and future research.

2 EITI. July 2013. The EITI Standard.http://eiti.org/document/standard 7 Introduction ThistechnicalnotepresentsrecommendationstotheExtractiveIndustriesTransparency Initiative(EITI)tobeusedinextendingthecurrentbeneficialownershipprovisiontoprivate companies, as well as publicly listed entities and wholly-owned subsidiaries, which are currently exempt.TheExtractiveIndustriesTransparencyInitiative(EITI)isaglobalcoalitionof governments,companiesandcivilsocietiesworkingtogethertoimproveopennessand accountablemanagementofrevenuesgeneratedfromextractednaturalresources.3 The currentEITIStandardrequiresthereportingofpaymentsbetweengovernmentandprivate firmsandencouragesvoluntarydisclosureofcontractterms.Currently,theEITIrequiresthe disclosureofbeneficialownershipforgovernmentandstateownedenterprises(SOEs) operatingintheextractivesector,andrecommendsthatprivatenon-exemptentitiesprovide disclosuresonavoluntarybasis.Theprovisionexemptspubliclylistedcompaniesandtheir wholly-owned subsidiaries because it assumes that beneficial ownership information is already collected from these companies by security exchange commissions in the countries where they aretraded.Giventheabsenceofarobustinternationalregulatoryframeworkforidentifying thebeneficialownersofprivatecorporateentities,thisreportprovidesrecommendations distilledfromvarioussourcestoserveasguidanceinestablishingfutureEITIbeneficial ownership requirements, and in strengthening accountability and transparency in the extractive sector.Tothiseffectthistechnicalnotehighlightsbeneficialownershipdisclosurenormsthat areinlinewiththenewEITIStandard,butalsoevaluateselementsbeyondtheStandards minimum requirements. Section 1 outlines the methodology used to develop the technical guidance provided. Section 2 outlines currentregulatory approaches of the various relevant actors within a set of G8, BRICS andEITIpilotcountries,alongwiththoseestablishedbyinternationalinstitutionssuchasthe EuropeanUnion(EU)andtheFinancialActionTaskForce(FATF).Section3liststheloopholes that exist in the current approaches. Section 4 sets forth a number of recommendations to be adopted by the EITI implementing countries at the regional, national, and international level to establishtheultimatebeneficialownersoflayeredprivateenterprises,andtostrengthen resource governance within the extractive sector. Finally, the conclusion summarizes why this is importantforEITIimplementingcountriesandhowtherecommendationsproposedcan benefitoveralltransparencyintheextractiveindustry.Theappendicesprovideadditional informationincluding:relatedinternationalinitiativesthatshedlightonapproachesto beneficialownershipinsectorsotherthantheextractiveindustries,aswellastablesthat display specific country norms and standards for select G8 and BRICS countries. Themappingofbeneficialownershipstandardsgeneratedthroughthisresearchprovidesa realisticandcriticaltechnicalframeworkfornaturalresourcegovernance,andservesasan importantengineforsustainableeconomicgrowth[which]contributestosustainable

3 ibid. 8 development and poverty reduction, a core objective of the EITI.4 More broadly, it is our hope thattheserecommendationsspearheadagenuinecommitmentamongEITIimplementing countries to ensure proper transparency and accountability in beneficial ownership disclosure. I. MethodologyInformationoncurrentpracticesrelatedtobeneficialownershipwascollectedfromthe websitesofvariouscountriesSecurityExchangeCommissions,relevantnationalcompetent authorities,andprivateandnationalbanks,specificallyinBRICS,G8andEITIimplementing countries.Thesesourcesofinformationwereusedbecausetheyprovidedthebeneficial ownershipframeworkinthecountriesthatwereexamined.Datadrawnfromnational-level actorsincludebills,regulations,proceduralguidelines,andnewsarticles.Datadrawnfrom internationalactorsoriginatedfromregulatorybodies,issue-basednetworks,taskforces,the OECD,andinternational financialinstitutions.Also,PricewaterhouseCoopers(PwC)KnowYour Customer(KYC)QuickReferenceGuide,whichlistsbeneficialownershipregulationsfor numerouscountries,wasusedtounderscorepossibleapproachesthatcouldbeincorporated intotheEITIStandard.5 Inordertovalidatethisinformation,emailsweresenttoKnowYour CustomerexpertsatPwCforeachoftheG8,BRICS,andEITICountries.Oneresponsewas received from a Forensic Senior Manager at PwC.6

The information analyzed to develop recommendations was compiled from the Resource Curse courselecturesanddiscussionsatTheNewSchool,aswellasfromonlinesecondarysources. Althoughsourcesofanalysisonbeneficialownershipintheextractiveindustriessectorsis limited, useful recommendations were found from documents produced by NGOs, multilateral institutions, national banks, and governments.7These documents outline recommendations for beneficialownershipasitpertainstothepreventionofmoneylaunderingandterrorism, recoveryofstolenpublicassets,andcurbingcorruption;providingusefulinsightonhow beneficialownershipcanbeapproachedintheextractiveindustrysector.Additional informationwasobtainedfrombusinessconsultancyandreferencesources,providing guidelinesandinsideradvicetobusinessesconsideringforeigninvestment.Studentsalso attendedthepanel,TheCostofConflictMinerals:HumanRightsandCorporateCompliance at The New York City Bar Association on October 3, 2013.

4 ibid., p. 95 PwC, January 2013. Know Your Customer: Quick Reference Guide http://www.pwc.com/en_GX/gx/financial-services/assets/pwc-kyc-anti-money-laundering-guide-2013.pdf 6 ibid. 7 Sources include: Revenue Watch Institute, EITI, Freedominfo.org, EITI, Transparency International, Banque de France, Central Bank of Timor Leste, Royal Bank of Canada, Government of United Kingdom, Ministry of Justice in Canada, The United States Securities Exchange Commission, Financial Services Authority of Norway, Financial Services Authority of United Kingdom, Government of Bermuda, Intergovernmental Action Group Against Money Laundering in West Africa, OECD, and the World Bank. 9 Datacollectionwashinderedbythevastpossibilitiesfortrackingcurrentapproaches,which overwhelmed initial collection efforts. In order to overcome this difficulty, research on current approachestobeneficialownershipwasnarrowedtoarealisticsample:BRICS,G8,andEITI countries.Anotherhindrancewasthelackofinformationspecificallyrelatedtobeneficial ownership and extractive industries. As mentioned above, when possible, parallels were drawn from other sectors (for example, AML). Finally, limited sources were available that resolved the issueofwhethertheidentificationofthebeneficialownerwouldbeaddressedthroughthe supplychainsofcompaniesorthroughidentifyingtheultimatebeneficialowner.Theonly document referring to tracing beneficial ownership down the supply chain was the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.8 II. Data Collection This section summarizes the findings from the primary and secondary data collection processes. Theprimarydatacollectionprocessfocusedonmappingthecurrentnormsemployedby national-levelsecuritiesexchangecommissionsandbanks,andinternational-levelregulatory bodiesandfinancialinstitutionstoobtain,record,andtrackthebeneficialownersofprivate companies.ByexaminingtheregulationsinG8, BRICS,andEITIimplementingcountriesitwas possible to identify strengths and weaknesses in each countrys compliance framework. Specific data on individual country approaches to beneficial ownership is visualized in Tables 1, 2, and 3 (seeAppendixB).BroaderdataoncountrynormsandpracticesissummarizedinAppendixC. Theprimarydatawasusedtodeterminegaps,loopholes,andrecommendations,asrelevant forinformingbeneficialownershipregulationintheextractiveindustrysector.Conclusions were bolstered by the information compiled in the PwC guide.9 ThePricewaterhouseCoopers(PwC)guidesummarizesandlistsbeneficialownershipdue diligencenormsincountriesofinteresttoitsclients.10 Inaddition,theOECDDueDiligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas providesalistofrecommendationsvitaltoenhancingthetransparencyofmineralsupply chains.11 Inparticular,theOECDsSupplementarySectionsonGoldandTin,Tantalumand Tungstenhighlightedduediligencenormsforbeneficialowners.Thecurrentrequirements

8 OECD (2013), OECD Due Diligence Guidance for Responsible Supply Chains of Minerals 8From Conflict-Affected and High-Risk Areas: Second Edition, OECD Publishing. 8http://dx.doi.org/10.1787/9789264185050-en 9 PwC, January 2013. Know Your Customer: Quick Reference Guide. http://www.pwc.com/en_GX/gx/financial-services/assets/pwc-kyc-anti-money-laundering-guide-2013.pdf 10 ibid. 11 OECD (2013), OECD Due Diligence Guidance for Responsible Supply Chains of Minerals 11From Conflict-Affected and High-Risk Areas: Second Edition, OECD Publishing. 11http://dx.doi.org/10.1787/9789264185050-en 10 related to beneficialownershipidentifiedfrom these documentsareoutlinedbelow.Mapping theserequirementsledtotheidentificationofgapsandloopholesandspecific recommendations for the extractive industries sector (see Data Analysis, below). Requirementtoretrospectivelyverifyaclientsidentitybeforeanewregimehasbeen implemented. Financial Action Task Force (FATF) style Mutual Evaluation. Existence of transaction thresholds under which due diligence can be evaded. Conditions for reduced due diligence. Requirements for enhanced due diligence. Requirements for due diligence for beneficial owners. Requirements for due diligence in regards to Politically Exposed Persons (PEPs). Requirements for due diligence for correspondent banking relationships. Requirements for additional due diligence for non face-to-face transactions.Verificationofcustomeridentificationinformation,andauthenticationofidentification document copies. Requirements in beneficial ownership identification and verification. Relationships with shell banks. Suspicious activity reporting. Reporting activities that are not limited to suspicious transactions. Conditions under which transactions do not require disclosure. Penalties for non-compliance with reporting requirements. Handling ongoing transactions that have been flagged as suspicious. Ultra vires monitoring of transactions. Requirementforduediligenceinthedownstreammineralsupplychainandin downstream mineral companies.12 ThenormsandbestpracticesthathavebeenanalyzedforAMLcanbetransposedinthe context of beneficial ownership, in a manner that highlights the significance of transparency by governments and companies in the extractive industries, and in the necessity to improve public financialmanagementandaccountability13.However,beforeengagingin suchatransposition,

12 Downstream supply chain means the gold supply chain from refiners to retailers. Downstream companies include refined gold traders and gold markets, bullion banks and exchanges or other entities that do their own gold vaulting, jewellery manufacturers and retailers, and other companies using gold in the fabrication of products [...]OECD Due Diligence Guidance for Responsible Supply Chains of Minerals 12From Conflict-Affected and High-Risk Areas: Second Edition Supplement on Gold p. 70. 12 Upstream supply chain means the gold supply chain from the mine to refiners. Upstream companies include miners [...], local gold traders or exporters from the country of gold origin, transporters, international gold traders of Mined/Recyclable Gold and refiners [...] OECD Due Diligence Guidance for Responsible Supply Chains of Minerals 12from Conflict-Affected and High-Risk Areas: Second Edition, Supplement on Tin, Tantalum And Tungsten: Section C (1H) p. 37 and Supplement on Gold Pg. 70 13 See principle number 5 in the The EITI Principles http://eiti.org/eiti/principles(accessed November 20,2013). 11 it is important to categorize the gaps and loopholes in AML practices so as to obtain a broader sense of the overarching issues that are common between AML and beneficial ownership. AMLnormsandbestpracticesaddressthreeareasofconcern:IdentityVerification,Due Diligence, and Reporting. Gaps and loopholes in AML identity verification processes are used to preserve the anonymity of shareholders and key actors. Evading identification is achievable in the context of AML with the following configurations: For some countries such as India, China, and Russia, there are no requirements to verify the identity of customers prior to the introduction of new Anti-Money Laundering (AML) regimes.14 Use of third party identification verification services are based solely on an assurance that the third party has adopted measures for client identity clarification15 or that the certifier is suitable.16 Shareholdersofacompanyarenotsubjecttoidentificationorverificationunlessthey havemorethanacertainthresholdofshareorvotingrightsinthecompany.These thresholds are subject to country regulations and are not standardized. See Appendix D for the table of thresholds.Policiesuseambiguouslanguagesuchasshall,should,may,orrecommend when addressing conditions for identity verification.Factorssuchassize,hinderstheprogressofdownstreamcompaniesidentificationof refinersintheirsupplychain,andintheidentificationofactorsupstreamfromtheir direct suppliers.17 Due diligence gaps and loopholes in AML practices, revolve around evading detection of suspicious transactions and customer activities. Due diligence can be evaded or reduced through the following methods: Lack of enhanced due diligence based on nature and location of activity, or in respect to PEPs.18 Reducedduediligencebasedontypesoftransactionssuchaswiththegovernmentor governmental entities.19

14 PwC, January 2012. Know Your Customer: Quick Reference Guide. p. 126, 134, 165. http://www.pwc.com/en_GX/gx/financial-services/assets/pwc-kyc-anti-money-laundering-guide-2013.pdf 15 ibid., p.135. 16 ibid., p.131. 17OECD Due Diligence Guidance for Responsible Supply Chains of Minerals 17from Conflict-Affected and High-Risk Areas: Second Edition Supplement on Gold: Section II - Risk Management for Downstream Companies C(1B) 18 PwC, January 2012. Know Your Customer: Quick Reference Guide. p. 44. 19 ibid., p. 90. 12 Applyingreducedduediligencefortransactionsbetweenbanksorlicensed intermediaries regardlessofwhether thecountriesinwhich banks/brancharelocated effectively implement the FATF Recommendations.20 Evadingcustomerduediligencebyusingremittanceagents,moneychangers,or carryingouttransactionsbyauthorizedinstitutionsonbehalfofanon-account holder.21 Regulators sometimes only exist for banks but not for other financial services, as is the case of regulators for AML controls in Cte dIvoire.22

Policiesuseambiguouslanguagesuchasshall,should,may,orrecommend, allowingclientrelationshipmanagerstoavoidenhancedduediligenceofbeneficial owners.23 Inordertoelucidatesuspiciousactivities,itisimportantthatbanksandfinancialinstitutions enforcereportingpractices.Gapsandloopholesinreportingpracticesresultinafailureto capture activities that could inform banks and institutions about suspicious customer activities: Reportingsuspiciousactivitiesarentalwaysthorough.Forinstance,reportscanbe limitedtoonlymonitoringtransactionsthatgoaboveacertainthreshold,withoutany obligation to report transactions with suspicious beneficiary identities or originators.24 Customerbehaviorisnottakenintoaccount(e.g.reluctancetoprovideinformation whenopeninganaccount,orprovidinginformationthatiscomplexorexpensivefor the institution to verify).25 Lack of penalties for not complying with reporting requirements.26 Havingidentifiedtheseoverarchingthemes,thecollecteddatacanbeutilizedtoanalyzeand elaborate on how institutional weaknesses identified in AML practices can also apply to tracking beneficial owners.27

20 ibid., p. 194. 21 ibid., p. 131. 22 ibid., p. 28. 23 ibid., p. 91. 24 ibid., p. 81. 25 ibid., p. 133. 26 ibid., p. 24. 27 Refer to Appendix D and E for noted current beneficial ownership norms and issues in select countries of interest and a summary table of the PwC findings for beneficial ownership. 13 III. Data Analysis Thissectionbuildsuponthefindingsfromtheprimarydatacollectionprocessinorderto identifygapsandloopholesincurrentnormativeapproachestobeneficialownership;andto providerecommendationstotheEITIinexpandingthescopeofitsbeneficialownership provision to privately owned companies, publicly listed entities, and wholly-owned subsidiaries within the extractive industries, which are currently exempt.Inmappingcurrentnationalstandardsandnorms,theanalysisfoundthatwhileAML frameworksidentifiedtherelevantactors,andprovidedaplatformforuntanglingthe relationship between individuals and financial institutions; due diligence measures to reveal the ultimatebenefactorofprivatelyheldcompaniesintheextractiveindustrysectordidnot necessarily produce a chain of facts exposing beneficial owners of corporate entities. In its 2011 report,theWorldBankandUNOfficeforDrugsandCrimeStolenAssetRecoveryInitiative revealedthat150outofthe213grandcorruptioncasesinvestigated,involvedtheuseof corporate vehicles to hide beneficial ownership and the sources of funds, totaling $56.4 bn.28 Recognizing the divergent aims of the existing AML frameworks, the analysis highlights the gaps which must be addressed in order to materialize the EITI intent regardingbeneficial ownership of privately held corporations within the extractive sector. Additionally, the analysis uncovered loopholes within the current AML framework, which would bolster the EITIs transparency and accountability efforts, if rectified.Beneficial Ownership Gaps in current AML FrameworkDefining Beneficial Ownership Mappingofcurrent beneficialownershipnorms found that definitions ofbeneficial ownership areinconsistent.Theconceptishighlycontextual,andchangesdependingonitsreference.A generaldefinitionofbeneficialownershipreferstoanyindividualwhodirectlyorindirectly owns a financial instrument, and enjoys the benefits conferred through control. In the context ofAMLbankingregulations,beneficialownershipstatutesareconcernedwithrevealingthe true identities of individual benefactors and the origins of funds. The EITI intent differs in that it seeks to ascertain the ultimate benefactors of incorporated legal entities,throughtheownershipofsharesorothermeansofcontrol.Initsmostrecent articulation,theEITIdefinesbeneficialownershipinrespecttocompaniesasthenatural person(s)whodirectlyorindirectlyultimatelyownsorcontrolsthecorporateentities,and invitescountriestodraftdisclosurerequirementswithinthesebroadterms.29 Mapping

28 Department for Business Innovation and Skills. July 2013. Transparency & Trust Recommendation 30: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business Government of United Kingdom. Transparency and Trust: A discussion Paper.29 EITI. July 2013. The EITI Standardhttp://eiti.org/document/standard p. 24 14 approachesacrosssamplecountriesrevealedarangeofvaryingdefinitions.Thegeneral threshold for beneficial ownership across countries involves corporate entities with more than a25%interestincompanysharesorvotingrights.30 Thisthresholdwasfoundtobethe thresholdatwhichashareholderhasaminorityblockingpositionincompanypositions.31 In addition,entitiestaskedwithregulatoryresponsibilitiesofpubliclytradedcompanies,provide narrowerdefinitionsofbeneficialownershipforindividualsthathavepartownershipina publicly listed company by requiring individuals to disclose their ownership at lower thresholds. Forexample,theU.SSecuritiesandExchangeCommissionrequiresthedisclosureofsecured interestsbyindividualsata5%32 threshold,whereastheU.K.CompaniesHouserequires disclosureat3%33 forindividuals.InorderfortheEITItoachieveitsaims,itisimperativeto establishastandardizeddefinitionandthresholdofbeneficialownershiptobeappliedacross EITI compliant countries.Disclosures and Reporting of Beneficial Ownership Regardinglegalownership,requirementsdifferacrosscountries,withsomecountriesmore stringentthanothers.InAppendixB,Table1showsthecountriesthatrequirereporting changesofownership,andthosethatarenotobligatedtoreport.Withtheexceptionof publiclylistedcompaniesthatoperateunderstringentrequirements,includingthenecessary disclosureofbeneficial ownershipof10%ormore,beneficialownership provisionsareabsent in most countries.34

30 Department for Business Innovation and Skills. July 2013. Transparency & Trust Recommendation 30: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business Government of United Kingdom. Transparency and Trust: A discussion Paper.31 Ibid. 32 Securities Exchange Commission. 2012. Securities Exchange Act 1934.33 Department for Business Innovation and Skills. July 2013. Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business Government of United Kingdom. Transparency and Trust: A discussion Paper. pg 24 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/212079/bis-13-959-transparency-and-trust-enhancing-the-transparency-of-uk-company-ownership-and-increaing-trust-in-uk-business.pdf 34 Rosenberg & Weinberg Attorneys at Law. 2013. Reporting Requirements for Public Company Insiders. http://www.jrhwlaw.com/newsletters/business-law/reporting-requirements-for-public-company-insiders/ 15 Incorporation Practices Itisimperativetonotetheimportanceofaninstitutionalframeworkwhichallowsforeasein doingbusiness,andfosterstheexpedientdevelopmentofnewideasandentrepreneurial endeavors.Thisneedtoremaincompetitive,however,mustbebalancedwiththeneedto regulateandensurefairandtransparentpractices.Inregardstocompanyformation, competition among states has resulted in a race to the bottom, with many states requiring less informationforincorporation.All27EuropeanUnioncountriesrequiretheidentitiesof beneficial owners atthetimeofincorporation, whereasafewstateswithin theU.Sanda few notorious offshore tax havens do not require this identification at the time of incorporation. 35 Bearer Shares Anotherimportantdevelopmentisthetendencyforcountriestoeliminatetheuseofbearer shares. Bearer shares allow for anonymity on company registers. Brazils Law No. 8,021 dictates that no payment or redemption regarding any security or investment shall be made out to any unidentifiedbeneficiary,andneithersecuritiesnorpaymentsshallbeissuedorpaidinbearer form; this represents a strong example of the bearer share reform (see Brazil in Appendix C).36

Nonetheless,individualscontinuetohideownershipwithnomineeandcorporatedirectors serving as willing frontmen. Without disclosure on the part of the involved parties, the ultimate beneficialownerrequirementsprovefutile.Tothiseffect,incentivesandpenaltiesmustbe developed to compel corporate directors to indicate the existence of beneficial owners subject to the proposed disclosure requirements. Corporate Service Providers (CSPs) Giventheinconsistencyinformationlawsacrosscountriesandbetweenstates,alucrative market exists for private actors seeking to take advantage of the most lenient of formation laws. CorporateServiceProvidersfacilitate thecreationofshellcorporations; acorporationwithout businessoperationsandnosignificantassets.Often,theseentitiesmarkettheanonymityof beneficial owners within certain jurisdictions to solicit business from individuals with a need or desiretoobscuretheirfinancialinterests.CSPsaregenerallyunknown,unregulated,and susceptibletobriberyinordertobypassbeneficialownershipandotherdisclosure requirements.26

35 Department for Business Innovation and Skills. July 2013. Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business Government of United Kingdom. Transparency and Trust: A discussion Paper. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/212079/bis-13-959-transparency-and-trust-enhancing-the-transparency-of-uk-company-ownership-and-increaing-trust-in-uk-business.pdf 36 Brazil: Tax Haven Jurisdictions - Haven or Hell?Mondaq, January 2013. http://www.mondaq.com/x/215184/Income+Tax/Tax+Haven+Jurisdictions+Haven+Or+Hell 16 Shell Companies In the US, states such as Delaware, Nevada, and Wyoming serve as attractive locations for the development of shell companies. In particular, Delaware has a large amount of shell companies due to its ability to permit companies to lower their tax bills in another state, (the other state is usually where the companies headquarters or business tasks are performed). The lowered tax bill is achieved through the movement of royalties and similar revenues to holding companies inDelaware,wheretheyarenottaxed.37 Moreover,duringtheregistrationprocessfora companyinDelaware,entrepreneursareallowedtoestablishabankaccount,internationally, with the facade of an American address. Thus, companies dont possess US bank accounts and arenotrequiredbyDelawaretopresentdocumentation,whichmakesidentifyingtheowners ofthesecompaniesdifficult.Shellcompaniestheyoftenserveasatoolfortaxavoidanceand prove a major roadblock to transparency and accountability. Limited Statutory Powers WithinthecurrentAMLframework,thereexistssomemeasuresbywhichtheidentitiesof beneficialownersmaybedisclosed.Inmostcountries,banks,lawyers,andotherprofessional bodiesarerequiredtodeterminethebeneficialownersofcompaniesbeforeconducting business.Additionallawenforcementagenciesmaycompelthedisclosureofbeneficial ownership through a summons or court subpoena.38These measures are, however, limited by theneedtoobtainadditionalordersalongeachnodeofthesupplychaininreachingthe beneficialowner.Likewise,professionalbodiesmayfallshortinascertainingbeneficial ownershipdespitetheirbestefforts.Makingpublicthebeneficialownersofcompaniesisnot simplyanaimoftheEITIbutenhancestheabilityforauthoritiestocombatotherhostsof fraudulent practices and malevolent actors.

37 Wayne, Leslie. How Delaware Thrives as a Corporate Tax Haven. http://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html?pagewanted=all&_r=0 38 Department for Business Innovation and Skills. July 2013. Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business.Government of United Kingdom. Transparency and Trust: A discussion Paper. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/212079/bis-13-959-transparency-and-trust-enhancing-the-transparency-of-uk-company-ownership-and-increaing-trust-in-uk-business.pdf 17 Loopholes within current AML Framework within Financial InstitutionsBanking loopholes While bankingloopholesdonot directlytargetbeneficialownershipintheextractiveindustry, the data collection analysis found financial institutions pivotal to collecting beneficial ownership informationinthisindustrybecausetheyareakeyinstitutionthatisalreadyinteractingwith privately-ownedextractivecompanies;andintheory,arealreadycollectingthistypeof information. The following loopholes within financial institutions were identified: Bank Secrecy Laws Manycountrieshavebankingsecrecylawsthatpermitbankstomaintainstrictconfidentiality of their clients information, even when those clients are under investigation for involvement in illegalfinancialflows.Thesesecrecylawsallowshellcompaniestohidebeneficialownership information. Due Diligence Anotherloopholerelatedtothebankingsectoristhatofbankingduediligenceandthe ambiguouslanguageusedinbeneficialownershippolicies.Occasionally,banksareonly requiredtotakeariskbasedapproachoradequatemeasureswhenverifyingbeneficial ownership.Thisallowstherelationshipmanagersofthebanktorelyontheirowndiscretion priortoverifyingclientidentityanduncoveringcomplexbeneficialownershipstructures. Furthermore,theexistenceofminimumtransactionthresholdsunderwhichduediligenceis notrequiredallowsforcustomerstosplitlargetransactionsintoseriesofsmallunregulated ones to avoid identification disclosure.39 Verification When banks record beneficial ownership, there is no independent verification mechanism that validatesthisinformation;whichincreasestheriskofreportinginaccurateorpartial information to avoid delayed transactions.40

39 PwC, January 2012. Know Your Customer: Quick Reference Guide. Ghana. p. 19. http://www.pwc.com/en_GX/gx/financial-services/assets/pwc-kyc-anti-money-laundering-guide-2013.pdf 40 ibid., India, China and Russia. p. 126, 134, 165. 18 Enforcement and Penalties of AML RegulationsThisanalysisfoundthatduetotheapparentimportanceofenforcementofbeneficial ownershipregulations,countrydataandsecondaryanalysisrarelyprovidestatisticaldataon rates of enforcement and penalties. Nevertheless, the analysis extracted from reporting norms ofSuspiciousActivityReports(SARs)in76countriesareusedinthisdataasanindicatorfor penaltynormswithintheAMLcontext.41 Theanalysisfoundthat13%ofcountriesdonot enforcepenaltiesforexcludingreportingSARs,orforreportingmisinformationonSARs,or havepenaltiesthatarenotclearlydefined.42 Thelackofenforcementmechanismand penaltiesprovideslittleincentivetoreportandmaintainrecordsonbeneficialownership. Therefore,althoughmostcountrieshaveclausesinanti-moneylaunderingpoliciesthatcover beneficial ownership, reporting and enforcement are still inadequate. Where recommendations doexistonenforcementandcompliancepractices,thereisanemphasisonthenecessityof thoroughly communicating compliance expectations and strictly applying penalties. Refer to the case of CSPs in the recommendation section for further data on enforcement.IV. Recommendations As a result of mapping the G8, BRICS, EITI implementing and additional countries, the analysis concludes that the following recommendations be integrated into the EITI beneficial ownership standard.It is recommended that EITI: 1.Standardize definitions, thresholds, and due diligence procedures.2.Extend EITI beneficial ownership requirements to publicly listed and wholly-owned subsidiaries. 3.Ensure transparent incorporation practices. 4.Require EITI implementing countries to create public registries.5.Create reporting and enforcement mechanisms.

41PwC, January 2012. Know Your Customer: Quick Reference Guide. 42 Countries include: Angola, Cameroon, Colombia, Cte dIvoire, Gabon, Indonesia, Italy, Kenya, Pakistan, and Portugal PwC. 2013. KYC Guidelines Anti-Money Laundering Understanding global KYC differences 19 1. Promote Standardized Definitions and Due Diligence Procedures Torecognizeambiguityandinconsistenciesindefinitionsandduediligenceprocedures,itis recommended that the following definitions and procedures be standardized and promoted by the EITI, as well as required for all EITI implementing countries.Beneficial Ownership Therecommendedstandarddefinitionofbeneficialownershipisborrowedfromthe Incorporation in Transparency Assistance Act (S 1465) proposed by the U.S. Senate and aligned with the current EITI definition: As any natural person who, directly or indirectly (i) exercises substantial control over a corporation or limited liability company; or (ii) has a substantial interest in or receives substantial economic benefits from the assets of a corporation or limited liability company.43 Beneficial Ownership Thresholds Fordisclosurepurposes,itisrecommendedthattheEITIStandardadopta10%thresholdfor corporateentitiesanda3%thresholdforindividualshareholders.Thesethresholdsshouldbe required for all EITI implementing countries. It should be noted that, of the countries reviewed, themoststringentrequirementforcorporatedisclosureswasfoundintheUAEandNigeria, which require a 5% disclosure, but this raises questions of effective implementation (See Table 2). 24 of the countries reviewed use a threshold of 25% (Appendix C).44Most of the countries reviewed (69 countries) do not have a disclosure threshold in their policies, which presents an opportunityfortheEITItodetermineaneffectiveandfeasiblethreshold.Theexampleof Bermuda shows the feasibility for countries to decrease their thresholds. Bermuda is one of few countriestotakethesteptowardsreducingitsthresholdfrom25%to10%(SeeBermudain AppendixC).Therecommendedthresholdsneedtobeadoptedinordertobuildeffective regulatoryregimeswithproperenforcementmechanismsthatensuretransparencyand accountability. Athresholdisnecessarytostandardizeandcreatepublicregistries.However,identifying beneficialownersshouldnotrelyonthresholdsalonebecausethesethresholdscanbe manipulatedbycompanyownerswhoassertdecisionmakingpowerinthecompany.For exampleacoalitionofindividualswithownershipbelowthethresholdcandecidetovotein concert to influence company decisions. It is important to build a comprehensive framework for addressing the question of beneficial ownership.

43 Grassley, Feinstein and Harkin. August 2013. S 1465: Incoporation Transparency and Law Enforcement Assistance Act. 113th Congress. Section 2d (i,ii).https://www.govtrack.us/congress/bills/113/s1465/text 44 EITI. Oil and Gas.http://eiti.org/files/Oil%20and%20gas.pdf 20 Beneficial Ownership Due DiligenceThe current EITI Standard fails to address how EITI implementing countries should conduct due diligence on ultimate beneficial owners. To avoid loopholes and ambiguous language in national beneficial ownership due diligence requirements, it is recommended that EITI standards require allEITIimplementingcountriestoconductduediligenceonbeneficialownerssimilartolegal entities and individual clients. Furthermore, ongoing and comprehensive due diligence practices shouldnotcompensateforlackofbeneficialownershipthresholds(e.g.TimorLestein Appendix C).TheduediligenceproceduresoftheCzechRepublic,(disregardingthethresholdofownership requirement)provideacomprehensiveduediligenceframeworkfortheEITIstandard concerning identification requirements. 45 These requirements include: The shareholders of a legal entity (with more than 25% holding) must be.Individuals: Name, surname, birth identification number ordate of birth, place of birth, sex,addressandcitizenship.Thesewouldnormallybeverifiedbyanidentitycardor passport.Individualswhoconductbusiness:Inadditiontotheabove,fullnameofthebusiness, place of business and identification number needs to be noted.Legalentities:thefullname,residency/seat,identification(orsimilaridentification receivedfromforeignoffices)showingevidenceofthecompanysexistence(i.e. certificateofincorporation,traderegisterstatementorother).Thesameprinciplesfor 'Individuals' apply for the identification of individuals in the companys statutory body. If thecompanysstatutorybodyortheownerisanotherlegalentity,identification documentation must also be collected for that entity. Politically Exposed Persons (PEPs) Current national definitions of PEPs are inconsistent and allows for the flexible interpretation of due diligence measures. Several countries only conduct due diligence on foreign PEPs, and omit domestic/nationalPEPs.Theanalysisof107countriesfoundthat53%ofcountrieshad ambiguousdefinitionsofPEPsand/orPEPduediligencerequirements.46 Furthermore,in Appendix B, Table 2 reveals the techniques and methods employed by PEPs in GIABA countries to adversely affect the effective functioning of enforcement agencies.47The case of Bonaccorsi inItaly(AppendixC,Italy)revealstheimportanceofadefinitionofPEPsthataccountsfor family ties, especially for people who have been informally labelled as trustworthy. It is recommended that the EITIs beneficial ownership standards address the policy loophole in defining PEPs, and PEPs due diligence by standardizing the definition of PEPs to include foreign

45 PwC, January 2013. Know your Customer:Quick Reference Guide. 46 PwC, January 2013. Know your Customer:Quick Reference Guide and Appendix D and E. 47 GIABA s an institution of the Economic Community of West African States (ECOWAS) responsible for facilitating the adoption and implementation of Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) in West Africa. http://www.giaba.org/ 21 and domestic PEPs. EITI should require all PEPs to undergo measures of enhanced due diligence regardless of rank or association.Nigerias Securities and Exchange Commission provides a comprehensive definition of a PEP, and it is recommended that EITI consider this definition for the Standard.As defined by the Securities Exchange Commission of Nigeria, a Politically Exposed Person includes: (a)individualswhoareorhavebeenentrustedwithprominentpublic functionsbya foreigncountry, forexampleHeadsofState orGovernment, seniorpoliticians,seniorgovernment,judicialormilitaryofficials,senior executivesofStateownedcorporationsandimportantpoliticalparty officials; (b) individuals who are or have been entrusted domestically with prominent publicfunctions,forexampleHeadsofStateorofGovernment,senior politicians, senior government, judicial or military officials, senior executives of State owned corporations and important political party officials; and (c) persons who are or have been entrusted with a prominent function by an internationalorganizationandincludesmembersofseniormanagement such as directors, deputy directors and members of the board or equivalent functions other than middle ranking or more junior individuals. 48 Specific recommendations regarding the due diligence of PEPs:49 Apply enhanced due diligence to all PEPs, foreign and domestic. Require a declaration of beneficial ownership. Request asset and income disclosure forms. Conduct a periodic review of PEP customers. Avoid setting one size fits all limits on the time a PEP remains a PEP. Investigate family members or close associates of a PEP.50

48 Securities Exchange Commission. 2013. Securities and Exchange Commission (Capital Market Operators Anti-money Laundering and combating the Financing of Terrorism) Regulations. The Federal Republic of Nigeria. 2013Pg 56 http://www.sec.gov.ng/capital-market-operators-anti-money-laundering-and-combating-the-financing-of-terrorism--regulations-2013.html 49 Stephenson, Kevin M. et al. 2011. Barriers to Asset Recovery.The International Bank for Reconstruction and Development/The World Bank. 50 Revenue Watch Institute. 2012. International Standards on Beneficial Ownership. 22 2. Extension of EITI Beneficial Ownership Requirements to Publicly Listed and Wholly-owned Subsidiaries SECs already collect beneficial ownership information from companies traded on national stock exchanges.Therefore,itwillnotplaceadditionalburdenuponcompaniestosharethis information with the EITI. By including data of publicly listed companies and their wholly-owned subsidiariesinpublicregistries,datathatwasonceconfinedtonationalborderswillbe universallyavailable.Bycollectingthedisclosureinformationfromthesecompanies,theEITI willplayacriticalroleinstandardizingtheinformationdisclosedandinstreamliningpublic accesstothedata,whichsymbolizesanimportantcontributiontotransparency.Specific recommendations for the sharing of public registry data are listed below. 3. Transparent Incorporation Practices CSPs: Compliance efforts Targeting Corporate Service Providers AccordingtoFindleyetal.(2012),therearethreepossiblelevelsfortargetingbeneficial ownershipcompliance efforts:competentlegalauthorities,companyregistries,andCorporate ServiceProviders(CSPs).Duetothedegreeoffeasibilitytoimplementcomplianceinthese areas, addressing CSPs has the greatest potential for successful efforts. For instance, competent authorities are restricted to national enforcement, so compliance efforts at this level are limited, asbeneficialownershiptranscendsboundaries.Also,complianceeffortsatthelevelof company registries are limited because of the minimal information gathered in these registries, negligence of many companies to collect information, and lack of will to do so.51 In order to adequately target CSPs beneficial ownership legislation enforcement measures, the following actions are recommended: Map and register CSPs globally. RequireCSPstocollectandmaintaincompanyinformationbasedontheKnowyour Customer (KYC) model.Enforcepenalties.EmpiricalevidenceshowsthatCSPsaremorelikelytocomplywith beneficial ownership rules if penalties are enforced52. A risk-based approach towards PEPs is an important practice when tracing beneficial ownership in the extractive industries through national registries and banking records. However, FIndley et al.(2012)53 demonstratesthatrequiringCSPstofollowsuchguidelineshasnotbeenusefulin

51 Findley, M, Mielson D, Sharman J. 2012. Global Shell Games: Testing Money Launderers and Terrorist Financiers Access to Shell Companies.September 2012: Political Economy and Development Lab. 52 ibid 53 ibid 23 preventing the illicit transfer of funds to high-risk customers.54Hence, the identification of PEPs should be the responsibility of country governments. ItisrecommendedthatEITIconsiderBermudasrecentenhancementofregulationsaround CSPsasamodelofhowtoregulateanduseCSPsforcollectingbeneficialownership information. See Appendix C for details on Bermudas legislation for CSPs. Prohibiting Bearer Shares and Corporate Nominee Directors Theopportunitytoconcealbeneficialownershipthroughstructuresofbearersharesand corporatenomineedirectors,inhibitsopportunitiesforincreasedtransparencyand accountabilityinownershipstructures.Furthermore,thesestructuresaidcompaniesintax evasionschemesandmoneylaundering.ItisrecommendedthattheEITI,inlinewithcountry regulations like Brazil, prohibit the use of bearer shares and corporate nominee directors for all EITIimplementingcountries.Moreover,forallcompanieswithcurrentbearersharesand corporate nominee structures, it is recommended that EITI propose a timeline in which holders ofbearersharesconvertholdingstoordinaryregisteredsharesandcorporatenominee directors,torequireanydirectorwhohasenteredintoalegalarrangementwhich permanentlyhandsoverallresponsibilityforthemanagementofthecompanytoanother individualtodisclosethisfacttoCompaniesHouse;aswellastheidentityofthepersonon whosebehalftheyhavebeenappointed.Thisshouldmaketheuseofnomineedirectorsless attractive as a means to conceal corporate control. 55 4. Develop a Public Registry of Beneficial Owners In order to avoid loopholes in bank secrecy and information sharing across-borders, the World BankandtheFinancialActionTaskForce(FATF)recommendsthatcountriesimplement nationalbankregistriestocollectandmaintainaccountidentificationdata,beneficialowner information,andpowersofattorneythatcanbeaccessedviaalegalsubmissionprocessby recognized authorities56. Additionally, the FATF notes that information about shareholders such as the amount of shares possessed, and the different categories of shares should be included.57 In the Financial Services Authoritys (FSAs) analysis of banks in the UK, it is recommended that

54 Ibid55 Department for Business Innovation and Skills. July 2013. Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business Government of United Kingdom. Transparency and Trust: A discussion Paper. pg 13 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/212079/bis-13-959-transparency-and-trust-enhancing-the-transparency-of-uk-company-ownership-and-increaing-trust-in-uk-business.pdf 56 The Financial Task Force (FATF). (February 2012). InternatIonal Standardson Combating money launderingand the Financing of terrorism & ProliferatIon The FATF Recommendations. (accessed November 20, 2013 from www.imolin.org/pdf/imolin/FATF_New_Standards.pdf 57 Revenue Watch Institute, 2012. International Standards on Beneficial Ownership 24 commerciallyavailablePEPdatabasesbeexpandedandenhancedsobanksareabletoeasily identify high risk customers with reliable information.58 Public databases are a viable tool for cross country and cross institution information sharing. As aresultoftherecentG8meeting,inJune2013,anagreementontacklingtaxevasionwas reached.Todate,theG8endorsed8coreprinciplestoframetheimplementationofNational Action Plans for the regulation and enforcement of beneficial ownership disclosure.59A major component to these action plans is the proposal for the disclosure and publication of beneficial ownership information. A proposal to create public registries, which is maintained by the state, wasintroducedduringthemeeting,butadecisionremainstobeagreedupon.Itshouldbe noted,supportersforpublicdisclosure(suchasGlobalWitness)arenotdiscardingthe possibilityforfuturepublicregistries.60 SeveralcountriessuchasBermuda,Brazil,andthe United Kingdom have publicly committed to creating a public registry with beneficial ownership information. 61 Asastartingpointfortheadoptionofpublicbeneficialownershipdatabases,itis recommended that the EITI use the G8 principles on beneficial ownership to reinforce the new beneficial ownership requirements in the EITI Standards. Likewise, it is recommended that the EITIrequireallEITIimplementingcountriestocreateandmaintainpublicdatabases,as proposed by the G8 and the FATF.5. Create Enforcement Mechanisms and Strict Adherence to Reporting ThecurrentEITIStandardrequiresallEITIimplementingcountriestoreviewandupdate beneficialownershipofgovernmentandSOEsonanannualbasis.62 Further,tothecurrent requirement,arecommendedEITInormistoincorporatereportingofbeneficialownership changes into the annual reports submitted by EITI implementing countries. Proposed reporting timelines should be consistent with tax reporting by reaffirming, on an annual basis, whether a beneficialownercrossesthe10%thresholdthroughouttheyear.Findleyetal.(2012),shows thattheenforcementofpenaltieshasproventobeaneffectivewaytoimprovecompliance,

58 The Financial Services Authority (UK), 2011. Banks management of high money-laundering risk situations. www.fsa.gov.uk/pubs/other/aml_final_report.pdf 59 Government of United Kingdom. June 2013. G8 action plan principles to prevent the misuse of companies and legal arrangements Policy Paper issued by the Prime Minister's Office. https://www.gov.uk/government/publications/g8-action-plan-principles-to-prevent-the-misuse-of-companies-and-legal-arrangements/g8-action-plan-principles-to-prevent-the-misuse-of-companies-and-legal-arrangements 60 The Economist, June 2013. Reasons to be Cheerful http://www.economist.com/blogs/newsbook/2013/06/g8-summit 61 The Financial Services Authority (UK), 2011. Banks management of high money-laundering risk situations. www.fsa.gov.uk/pubs/other/aml_final_report.pdf 62 EITI. 2013. The EITI Standard 1.5 (f) 25 and therefore, EITI can use enforcement and penalties as a mechanism for increased disclosure of beneficial ownership structures.63 Inadditiontoincreasingreportingrequirements,itisrecommendedthattheEITIenforce beneficialownershipdisclosureforEITIimplementingcountriesbylistingallnon-reporting countriesasnon-compliantintheEITIannualassessments.Also,itisrecommendedthatthe EITIsupportEITIimplementingcountriesindefiningandimplementingpenalties.Finally,itis recommendedthatcompliancetoEITIrequireimplementingcountriestoenforcepenalties. Failure to do so will result in being listed as non-compliant. As such, EITI regulatory bodies need to be implemented at the national level.Conclusion It is clear that increased transparency, without addressing the question of beneficial ownership, isunlikelytoproduceanassociatedincreaseinaccountability.Theimportanceofsignificantly improvingthedisclosureofbeneficialownersinprivatelyownedcompaniesoftheextractive industriessectorisillustratedbythefollowingquestions:howtolegitimizeconcessionsof publicresourcesmadetoprivatefirms,ifwecannotproperlyascertaintheirowners,andto what degree can governments remain custodians of natural wealth for the benefit of citizens, if we cannot determine their involvement and vested interest in resource extracting enterprises? As the EITI Standard gains institutional traction with a greater number of countries adopting its principles,itisimportantthattransparencyinitiativescaptureandbenefitfromthegrowing politicalwilltodevelopaccountabilityinextractiveindustries.Currently,theEITIStandard requiresthatgovernmentsreportallpaymentsmadetoandbycompaniestogovernment entitiesfortheexploitationofnaturalresourcewealth,andfurtherencouragesthoseentities tomakeavailablecontractdisclosurestothepublic.TheStandardalsooutlinesthedisclosure forstateownedenterprises.Whilethismarksanimportantstartingpointinholding governments accountable to their citizens, this effort is severely limited due to the lack of clear regulatory norms for identifying and tracking the ultimate beneficial owners of privately owned companieswithintheextractiveindustry.Inaddition,thelackofadequateenforcement mechanismsandsubsequentimplementationofmechanisms(includingpenalties)weakens currentbeneficialownershipapproaches.Thequestionofbeneficialownershipisonethat demandsimmediateattention,andwillproveamonumentalgainifproperlyaddressed.The recommendationspresentedinthisanalysisprovidecriticalcontributionstowardsthis objective.

63 Findley, M, Mielson D, Sharman J. 2012. Global Shell Games: Testing Money Launderers and Terrorist Financiers Access to Shell Companies, September.: Political Economy and Development Lab. 26 APPENDIX A: Related/Relevant Initiatives A variety of international initiatives shed light on approaches to beneficial ownership in sectors otherthantheextractiveindustries.Thefollowinginitiativesarevaluableintheiruseof definitions, practical approaches, and because each initiative reveals existing structures that are alreadyinplacethatcouldbebuiltupontoextendbeneficialownershiprequirementstothe extractive industries sector. Stolen Asset Recovery Initiative The Stolen Asset Recovery (StAR) Initiative is a partnership between the UN Office on Drugs and Crime (UNODC) and the World Bank Group (WBG) with the aim of reclaiming corrupt assets.64 This is achieved through the following objectives: 1.Aiding countries with establishing the legal framework, institutional expertise, and skill necessary to recover assets.65 2.Providing practical counsel on the strategy and management of asset recovery efforts.66 Relevance to Beneficial Ownership The StAR initiative recommends ratification of the UN Convention against Corruption, and compliance with FATF (especially those on PEPs and KYC norms). Asset Recovery Networks TheInternationalCentreforAssetRecovery(ICAR)isabranchofSwitzerlandsBaselInstitute onGovernance,andassistscountriesinretrievingstolenassetsthroughtrainingprogrammes, legalassistance,andinternationalcooperation.67 TheCamdenAssetRecoveryInter-Agency Network(CARIN)isaninformalnetworkofcontactsandacooperativegroupfocusedon blockingcriminalsfromobtainingillicitprofits.68 AfewgoalstheAgencyadvocatesinclude forming a network of contact points, underscoring the significance of exchanging information andbestpractices,traininginitiatives,andprovidingrecommendationstogovernmental organizations such as the European Commission and Council of the European Union.69

64 Stolen Asset Recovery Initiative. Our Work.http://star.worldbank.org/star/about-us/our-work 65 ibid., Capacity Building. 66 ibid., Case Assistance. 67 Basel Institute on Governance. International Centre for Asset Recovery (ICAR). http://www.baselgovernance.org/icar/ 68 Camden Asset Recovery Inter-Agency Network (CARIN). The History, Statement of Intent, Membership and Functioning of CARIN. https://www.europol.europa.eu/sites/default/files/publications/carin-manual.pdf 69 ibid. 27

Other Legislations70 G20 Anti-Corruption Action Plan 2013-2014 is at its halfway point. SomepositivedevelopmentsinthelastyearincludeSaudiArabiaratifyingtheUN Conventionagainst Corruption (UNCAC), China becoming the final G20 member to sign theMultilateralConventiononMutualAdministrativeAssistanceinTaxMatters,and theG8scommitmenttodevelopingnationalactionplanstoaddresssecrecyinshell company structures. The European Union (EU) has also passed strong transparency legislation calling for the extractiveindustriestoreportonadditionalindicatorsonacountry-by-countryand project-by-project nature. TheCanadianCorruptionofForeignPublicOfficialsAct,establishedin1998,denotes measuresthatwouldhinderbriberyamongstforeignpublicofficialsorPolitically Exposed Persons (PEPs).71 TheSarbanes-OxleyActof2002delvesintothepreventionandpunishmentof corporateandaccountingfraudandcorruption.72 Inaddition,theActestablishesa PublicCompanyAccountingOversightBoard,whichincreasescorporateresponsibility andusefulnessorcorporatefinancialdisclosure,increasespenaltiesforcorporate wrongdoing, and strengthens the independence of firms that audit public companies.73

AccordingtoSection1504oftheCardin-LugarAmendment(2010)totheDodd-Frank WallStreetReformandConsumerProtectionAct,extractiveindustrycompaniesare requiredtooutline,inanannualreport,anypaymentsmadebythecompanyorits correspondingentities toa foreigngovernment ortheFederalGovernmentconcerning oil, natural gas, or mineral commercial projects.74

70 Transparency International. Global Voices Call For G20 Action On Corruption.September 2013. http://www.transparency.org/news/feature/global_voices_call_for_g20_action_on_corruption 70 71 Minister of Justice, Canada. Corruption of Foreign Public Officials Act, 1998 (Last amended on June 19, 2013). http://laws-lois.justice.gc.ca/PDF/C-45.2.pdf 72 Zameeruddin, Rizvana. The Sarbanes-Oxley Act of 2002: An overview, analysis, and caveats. 72http://www.westga.edu/~bquest/2003/auditlaw.htm 73 ibid. 74 Section 1504 Disclosure of Payments By Resource Extraction Issuers 28 APPENDIX B: Figures And Tables Figure 1: Countries evaluated 29 Figure 2: Countries evaluated, continued Sources: EITI Countries75. PwC, January 2012. Know Your Customer: Quick Reference Guide76. Table 1: Which jurisdictions require companies to report change in ownership? Source: Marriage, A., (2013) Secret structures, hidden crimes: Urgent steps to address hidden ownership, money laundering and tax evasion from developing countries. European network on debt and development.77

75 http://eiti.org/countries 76 http://www.pwc.com/en_GX/gx/financial-services/assets/pwc-kyc-anti-money-laundering-guide-2013.pdf 30 Table 2: Techniques/Methods employed by PEPs to adversely affect the effective functioning of enforcement agencies Source: GIABA Report, May 2010. Corruption and Money Laundering Nexus: An analysis of Risk and Control Measures in West Africa78 Table 3: Awarness of FATF recommendations Source:GIABAReport,May2010.CorruptionandMoneyLaunderingNexus:AnanalysisofRiskandControl Measures in West Africa79

77 http://eurodad.org/files/integration/2013/01/Secret-structures-hidden-crimes-web.pdf 78 GIABA Report. May 2012. Corruption and Money Laundering Nexus: An analysis of Risk and Control Measures in West Africa p. 48. http://www.giaba.org/media/f/114_corruption-and-money-laundering-nexus---english-rev051810-1-.pdf 79 ibid., p. 41. 31 APPENDIX C: Country Norms and Practices To further understand current practices in relation to properly addressing beneficial ownership, specificnormsandissueshavebeencompiledforsomeG8,BRICSandEITIpilotcountries.By identifyingloopholesandbestpracticesthatarealreadyinplaceinthesecountrieswecan bringforthanddefinerecommendations thatareofvalueintacklingthebeneficial ownership problem. BrazilLawNo.8,021ofApril12,1990establishesthatnopaymentorredemptionregardingany securityorinvestmentshallbemadeouttoanyunidentifiedbeneficiary,andthatneither securities nor payments shall be issued or paid in bearer form. Therefore, the disclosure of the identity of the beneficiary is a legal mandatory requirement in Brazil. Furthermore, the Brazilian Corporation Law (BCL) explicitly states that shares and debentures must be issued in registered form.80 Requirementsofidentificationandcontrolgobeyondtheusualrequirementsimposedon participantselsewhere,totheextentthatalltransactionscarriedoutintheBrazilianfinancial and capital markets must be identified up to the level of the final beneficiary. InordertocreateacontractualframeworkforinvestorsidentificationinBrazil,theBrazilian Securities Exchange Commission has made special use of Principle 5 on Third Party Reliance. Accordingtothisprinciple,amongthespecificactionsrecommendedbyIOSCO,theBrazilian system has adopted the following81: Prohibition of anonymous accounts or accounts held under fictitious names. Creation of policies that describe the Client Due Diligence (CDD). ApprovaloftheCDDprocessesbycompetentauthoritiesknowyourclientinternal procedures. Maintenance of record keeping. Canada CanadafollowsinternationalbeneficialownershippoliciessuchastheNYSErules,SEC regulations,andTheSarbanes-OxleyActof2002,adoptingbestpracticesfromeach.For instance, the Royal Bank of Canadas Investor Services (a branch of the RBC Investor & Treasury

80 Brazil: Tax Haven Jurisdictions - Haven or Hell?Mondaq, January 2013. http://www.mondaq.com/x/215184/Income+Tax/Tax+Haven+Jurisdictions+Haven+Or+Hell 81 BM&F Bovespa. Final Beneficial Owner. http://www.bmfbovespa.com.br/en-us/international-investors/final-beneficial-owner/final-beneficial-owner.aspx?idioma=en-us 32 Services)ranked#1intheGlobalInvestor/ISFBeneficialOwnersSurvey.82 Accordingtothe newsrelease:Beneficialownersmadeupfromassetmanager/mutualfunds,publicand privatepensionfunds,insurancecompanies,corporations,centralbanks,sovereignwealth funds, endowment funds, private wealth managers and family offices were invited to rate their lendersacrosstwelveservicecategories.Theglobalsurveycoversbothcustodiallendersand non-custodial (third party) agent lenders.83 The four categories beneficial owners rated RBC on werecollateralmanagement,riskmanagement,dealingwithcorporateactions/dividends,as well as settlement and responsiveness to recalls. France Duringtheprocessofidentityverificationofaclient,banksarerequiredtocollectsourceof wealthinformation that willenableananalysisof theclientseconomic operationsinorderto determine,inconcreto,ifsuchoperationsareplausibleinrelationtotheclientsactual economic capacities or if they are suspiciously improbable84. By building a transaction feasibility profile of beneficial owners, banks and financial institutions can better detect suspicious transactions based on transactional plausibility.Italy TheBankofItalyhasreportedmultiplesuspicioustransactionsrevolvingaroundpriestsor otherreligiousactorsasfrontmenforobscurefinancialtransactions.Acasemadepopularby theItalianpresstookplacein2010whentheSicilianAntonioBonaccorsimanagedtolaunder EUR300,000bychannelingfundsthroughtheaccountofhispriestson,DonOrazio,viaThe Institute for the Works of Religion (IOR, also known as The Vatican Bank)85. ThiscaserevealstheimportanceofhavingarobustdefinitionofPEPsthatdoesntoverlook peoplewhoaretraditionallyviewedastrustworthyand,assuch,informallyexemptfromrisk analysis.

82 RBC Investor Services Tops Global Investor/ISF Beneficial Owners Survey.January 2013. http://www.rbc.com/newsroom/2013/0110-rbcis-tops-global-investor-survey.html 83 Ibid. 84 Banque de France: Autorit de Contrle Prudentiel. September 2011. 2. Obligations de vigilance relatives au bnficiaire effectif in Lignes Directrices Sur Les Bnficiaires Effectifs, p. 9. 84http://www.acpr.banque-france.fr/fileadmin/user_upload/acp/publications/registre-officiel/2011-lignes-directrices-ACP-pour-beneficiaires-effectifs.pdf 85 Damg, Mathilde. 2012. La difficile lutte contre le blanchiment au sein des banques.Le Monde. http://www.lemonde.fr/economie/article/2012/07/18/la-difficile-lutte-contre-le-blanchiment-au-sein-des-banques_1735126_3234.html 33 Japan Japanscivilserviceisfilledwithsituationsinwhichkeydiscussionpoints[are]debatedand agreed upon in study meetings and subsequently rubber-stamped in formal meetings, so as to avoidsubstantivedeliberationsfrombeingminute.86 Thus,reportinginJapansuffersfroma lack of clearly defined and enforced reporting requirements in which non compliance is subject to penalties. Effortstopromotetransparencyhavebeennon-governmentrelated,forinstancewithThe Transparency of Japanese Law Project that aims to provide legal information on international transactionsinJapantotheoverseascommunitybyorganizingandtranslatingintoEnglish, information which includes: overviews of Japanese law, specific Japanese legislation, doctrines, and case law.87 Such processes in Japan reveal the need for proper reporting practices to be implemented and penalties to be enforced. Without these regulatory check, institutions arent made accountable andcanoperateinobscurity.TheTransparencyofJapaneseLawProjectintroducesan interestingapproachtofillingthegapleftbyofficialinstitutions:promotingindependent transparency initiatives.Norway NorwayisregulatedbytheFinancialSupervisoryAuthorityofNorway(Fnanstilsynet)(FSAN). TherearenospecificbeneficialownershippoliciesundertheFSAN,buttheAMLActcovers beneficialownershipasitrelatestomoneylaunderingprevention.Beneficialownershipis defined by any natural person who ultimately owns or controls the customer and/ or on whose behalfofatransactionoractivityisbeingcarriedout.FSANuses25percentofthesharesor votingrightsasthethresholdfordirectorindirectownership.Ifthecompanyhasfinancial instrumentsonaregulatedmarketinanotherEuropeanEconomicAreastate,thecompanyis subjecttothosedisclosurerequirements.Verificationoftheidentityofbeneficialownersis only based what the institution deems as reasonable measures and therefore, is dependent on thesituation.Reportingisonlyrequirediftheentityrequiresbeneficialownershiptobe reported. If reported it should be clear and unambiguous88. Timor Leste Timor Leste does not have an independent regulatory body, but the Central Bank of Timor Leste establishedthebeneficialownershippoliciesforincountrytransactions.Whilethepolicies outlinehowtoverifyandconductduediligenceforbeneficialownership,theyfailtodefine

86 ibid. 87 The Transparency of Japanese Law Project. http://www.tomeika.jur.kyushu-u.ac.jp/ 88 The Financial Supervisory Authority of Norway, 2009. Act relating to measures to combat money laundering and the financing of terrorism, etc. (Money Laundering Act). 34 beneficialownershiporthresholdsatwhichtoconsideranaturalpersonabeneficialowner. Theanti-moneylaunderingpolicystates:identifybeneficialownershipandcontrol,i.e. determinewhichindividual(s)ultimatelyown(s)orcontrol(s)thedirectcustomer,and/orthe person(s)onwhosebehalfatransactionisbeingconducted;(d).verifytheidentityofthe beneficialownerofthecustomerand/orthepersononwhosebehalfatransactionisbeing conducted, corroborating the information provided in relation to (c); and (e). conduct on-going duediligenceandscrutinyi.e.performon-goingscrutinyofthetransactionsandaccount throughoutthecourseofthebusinessrelationshiptoensurethatthetransactionsbeing conductedareconsistentwiththebanksexpectationandknowledgeofthecustomer,its businessandriskprofile,including,wherenecessary,identifyingthesourceoffunds.Timor Leste,howeverdoesexplicitlyoutlinetheobligationtoconductduediligenceonanongoing basis.89

United Kingdom TheUnitedKingdomisregulatedbyTheFinancialConductAuthority(FCA)andthePrudential RegulationAuthority(PRA),thepredecessorsoftheFinancialServicesAuthority(FSA).There arenospecificbeneficialownershippoliciesundertheFCAorPRA,buttheFSAsBanks management of high money-laundering risk situations covers beneficial ownership as it relates to money laundering prevention and the FSAs findings of banks compliance with due diligence ofbeneficialownership.TheFSAdefinesbeneficialownershipbeneficialownersofbodies corporate(forexamplecompanies,trustsandcharities)includeanyindividualwhoultimately ownsorcontrolsmorethan25%ofthesharesorvotingrightsinthebody;orotherwise exercises control over the management of the body. In their findings, the FSA found a third of theirsampleofbanks(8majorbanksand19mediumandsmallersizedbanks)didnot understandlegalrequirementsforclientduediligenceobligationsinrelationtobeneficial owners.Yet,theFSAonlyrequiresafirmtoconductadequatemeasurestoidentifythe beneficial owner and only requires client due diligence of beneficial ownership on a risk based approach.90 Bermuda Bermudasprudentialandanti-moneylaunderingandanti-terroristfinancing(AML/ATF) legislativeframeworkwasupdatedinJuly2013toincluderegulationofCSPs.Theupdates include decreasing the threshold for which beneficial ownership is defined from 25% to 10% for

89 Central Bank of Timor Leste, 2004. Banking and Payments Authority of Timor-Leste. Public Instruction no 02/2004 on the Prevention of Money Laundering, Customer Identification and Record Keeping. The Governing Board.90 The Financial Services Authority (UK), 2011. Banks management of high money-laundering risk situations. www.fsa.gov.uk/pubs/other/aml_final_report.pdf 35 allCSPsthatsetupbeneficialownershipstructures.Theanti-moneylaunderingandanti-terrorist financing legislation now requires:91 Both the Companies Act 1981 and the Exchange Control Act 1972 impose requirements to identify the beneficial owners of Companies; Thereisarequirementtosubmittoacentralauthority(theBermudaMonetary Authority), for vetting and approval, information on ultimate beneficial owners (using a 10%threshold),attimeofapplicationforincorporation.Inaddition,ExchangeControl permissionisrequiredfortransferofsharesfornon-residents.Allsuchinformationis retained in the Bermuda Monetary Authoritys (BMA) files. Basic information must be provided to the Registrar of Companies annually; CompaniesarerequiredtomaintainaregisteredofficeinBermudaandmustkeepa register of shareholders which must be accessible for public viewing; Companies formed under the laws of another country, who wish to carry on business in Bermuda,arerequiredtoobtainapermitissuedbytheMinisterofEconomic Development. Permission requires a full vetting of ultimate beneficial ownership by the BMA; Under the regulatory legislation there are shareholder controller provisions for Financial Institutions, requiring approval of such persons by the Bermuda Monetary Authority; ProvisionsintheCompaniesActrequireapprovalfromtheMinisterofEconomic Developmentforalocalcompanytoexceedthe40%shareholdinglimitfornon Bermudianownership;andallowtheMinister,(whoalsogetsinformationonultimate beneficialownershipandhassuchinformationvetted),tostipulatedetailed requirements in relation to such ownership; CSPsarenowrequiredtoapplytotheBMAforlicensesandwillberegulatedas Financial Institutions and subject to prudential and AML/ATF requirements ( this regime came into effect January 1, 2013); PersonsactingasnomineesareclassifiedasCSPsandthereforesubjecttothe appropriate licensing and prudential requirements; InformationrequirementsinrelationtobeneficialownersareimposedonFIs,lawyers and accountants at the 25% threshold. However for CSPs, which are also regulated as FIs, the threshold is 10%; Thereareavarietyofenforcementpowersinrelationtonon-complianceunder regulatory, AML/ATF and company legislation; Thereareestablishedlegislativegatewaysforexchangeofinformation-todomestic andinternationalcompetentauthorities;andLawenforcementauthoritiesandother relevant agencies can gain full access to beneficial ownership information and can share with foreign counterparts.

91 Government of Bermuda. 2013. Bermudas G8 Beneficial Ownership Action Plan.The Cabinet Office. http://www.royalgazette.com/assets/pdf/RG140491730.pdf 36 APPENDIX D: PwC Analysis of KYC Guidelines, EITI Pilot Countries Beneficial Ownership, and PEPs Summary Tables and Charts Table 4: Countries that have practice guidance beyound the FATF recommendations * G8 Countries ** BRICS *** EITI Countries Source: PwC, KYC Guidelines, 2013. Data not available for Iraq and Portugal. Only 8 EITI countries were included. 37 Table 5: Beneficial Ownership Tresholds for G8, BRICS and EITI Countries The following countries did not specify beneficial ownership thresholds: Afghanistan, Albania, Argentina,Azerbaijan , Bahrain, Belgium, Bolivia, Bosnia & Herzegovina, Brazil, Burkina Faso , Central Republic of Africa, Cameroon, Chad, China, Colombia, Cte dIvoire, Democratic Republic of Congo , Egypt, Finland, France, Gabon, Ghana,Guatemala ,Guinea,Honduras,India, Indonesia, Iraq, Isle of Man, Israel, Italy, Jamaica, Jordan, Kazakhstan, Kyrgyz Republic , Kenya, Lebanon , Liberia,Madagascar, Malaysia, Mali, Mauritania , Mexico, Mongolia, Mozambique, Netherlands, Niger,Oman, Pakistan, Paraguay, Peru, Philippines, Romania, Russia, So Tom and Prncipe , Senegal, Singapore Solomon Islands, South Korea, Spain, Switzerland, Taiwan,Tajikistan ,Tanzania , Thailand, Timor-Leste , Turkey, Uruguay, Vietnam, Zambia. Source: PwC, KYC Guidelines, 2013 and local regulations. See details in Appendix E for local regulations used. 38 Table 6: Table of countries that have ambiguous language in requirements and definitions of beneficial ownership Source: PwC. 2013. KYC Guidelines, 2013 and local regulations. See details in Appendix E for local regulations used. 39 APPENDIX E: PwC Analysis of KYC Guidelines, EITI Pilot Countries Beneficial Ownership, and PEPs Summary Detailed analysis 40 References Primary Banque de France: Autorit de Contrle Prudentiel. September 2011. 2. Obligations de vigilance relatives au bnficiaire effectif in Lignes Directrices Sur Les Bnficiaires Effectifs, p.9. http://www.acpr.banque-france.fr/fileadmin/user_upload/acp/publications/registre-officiel/2011-lignes-directrices-ACP-pour-beneficiaires-effectifs.pdf Central Bank of Timor Leste. 2004. Banking and Payments Authority of Timor-Leste. The Governing Board. Department for Business Innovation and Skills. July 2013. Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business.Government of United Kingdom. Transparency and Trust: A discussion Paper. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/212079/bis-13-959-transparency-and-trust-enhancing-the-transparency-of-uk-company-ownership-and-increaing-trust-in-uk-business.pdf (accessed December 6, 2013). EITI. Oil and Gas.http://eiti.org/files/Oil%20and%20gas.pdf (accessed November 20, 2013). EITI. July 2013. The EITI Standard.http://eiti.org/document/standard Financial Accounting Standards Advisory Council http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1218220137466 GIABAs Mission. http://www.giaba.org/ GIABA Report. May 2012. Corruption and Money Laundering Nexus: An analysis of Risk and Control Measures in West Africa. http://www.giaba.org/media/f/114_corruption-and-money-laundering-nexus---english-rev051810-1-.pdf Government of Bermuda. 2013. Bermudas G8 Beneficial Ownership Action Plan.The Cabinet Office. http://www.royalgazette.com/assets/pdf/RG140491730.pdf Government of United Kingdom. June 2013. G8 action plan principles to prevent the misuse of companies and legal arrangements. Policy Paper issued by the Prime Minister's Office. https://www.gov.uk/government/publications/g8-action-plan-principles-to-prevent-the-misuse-of-companies-and-legal-arrangements/g8-action-plan-principles-to-prevent-the-misuse-of-companies-and-legal-arrangements 41 Grassley, Feinstein and Harkin. August 2013. S 1465: Incoporation Transparency and Law Enforcement Assistance Act. 113th Congress. Section 2d (i,ii).https://www.govtrack.us/congress/bills/113/s1465/text(accessed December 6, 2013). OECD. 2013. OECD Due Diligence Guidance for Responsible Supply Chains of Minerals From Conflict-Affected and High-Risk Areas: Second Edition, OECD Publishing. http://dx.doi.org/10.1787/9789264185050-en Revenue Watch Institute. 2012. International Standards on Beneficial Ownership. Rheuben, Joel. 2013. Japan Needs Dose of Camerons Transparency Medicine. http://www.freedominfo.org/2013/02/japan-needs-dose-of-camerons-transparency-medicine/

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