Businesses must prepare to reveal true owners

SPH deputy CEO Anthony Tan (right) receiving the award for the Most Transparent Company in the Consumer Discretionary category at the Sias Investors' Choice Awards yesterday. This marks the 12th time SPH has won this award. Mr Tan is accompanied by M
SPH deputy CEO Anthony Tan (right) receiving the award for the Most Transparent Company in the Consumer Discretionary category at the Sias Investors' Choice Awards yesterday. This marks the 12th time SPH has won this award. Mr Tan is accompanied by Mr David Gerald (left), president and chief executive of SIAS, and Mr Kenneth Yap, chief executive of Acra.ST PHOTO: DESMOND WEE

Govt plans to introduce measure which helps it check on firms set up for illicit purposes

The Government is training its sights on companies and limited liability partnerships that remain anonymous for illicit purposes.

These entities may soon be obliged to obtain and maintain beneficial ownership information for inspection by the law enforcement authorities on request under a proposed legal change. In other words, the authorities could demand to be told who really owns the entity.

The measure would be introduced by the Ministry of Finance (MOF) and the Accounting and Corporate Regulatory Authority (Acra), said Senior Minister of State for Law and Finance Indranee Rajah.

Ms Indranee said a public consultation will be conducted towards the end of the year to gather views on the proposed legal amendments.

She was speaking at the 17th Investors' Choice Awards Dinner Presentation ceremony at the Mandarin Orchard Singapore last night, held by the Securities Investors Association of Singapore.

Ms Indranee said the MOF and Acra are working on the details of the proposed move, requiring amendments to the Companies Act and the Limited Liability Partnerships Act. This, she added, includes steps companies and limited liability partnerships should take in identifying the beneficial owners and types of information that should be maintained.

STRIKING A BALANCE

We seek to strike a balance between maintaining the robustness of our regulatory regime and making sure we continue to be internationally competitive.

SENIOR MINISTER OF STATE FOR LAW AND FINANCE INDRANEE RAJAH

"A key consideration will be ensuring that the proposed legislative amendments are practical and feasible for companies and limited liability partnerships to implement," said Ms Indranee. "We seek to strike a balance between maintaining the robustness of our regulatory regime and making sure we continue to be internationally competitive."

She said that under current measures, professional intermediaries such as company service providers, financial institutions, lawyers and accountants are already required to collect beneficial ownership information through their customer due diligence efforts.

But this is insufficient after revelations from the Financial Action Task Force mutual evaluation exercise, resulting in its subsequent recommendations for improvement.

"Our focus is on better implementation of the existing international standards," said Ms Indranee.

She said transparency over beneficial ownership has been gaining international attention and some governments have laws requiring disclosures by privately owned companies and businesses set up as partnerships. "The crux of the issue lies in the misuse of corporate entities for illicit purposes, particularly by exploiting the anonymity that such corporate entities could provide.

"To effectively pursue investigations into the abuse of corporate entities, it is important for the authorities to be able to obtain and share beneficial ownership information which is adequate, current and accurate, in a timely manner."

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A version of this article appeared in the print edition of The Straits Times on October 01, 2016, with the headline 'Businesses must prepare to reveal true owners'. Print Edition | Subscribe