GUEST BLOGGER
Martin Kenney, CFE

I do not agree with the concept of open (or public) company registers. This is not for any ideological reason. Rather, they are a flawed tool in combating corruption and recovering assets from money launderers and fraudsters.

But if we are to have them, and if they are heading our way, then we should consider making them accessible via the payment of a realistic fee. This will help bolster their robustness and the verification process. At present, that’s often woefully lacking in some of the world’s best-known register systems.

Yet thanks to some very effective campaigning, ultimate beneficial ownership (UBO) of companies or land registers are being heralded as an effective tool to combat money laundering and corruption in the public mind. But that’s often not the case. Why? Hear me out.

Criminals can easily avoid revealing their true details in what are often poorly policed systems, and where they have every incentive to use mechanisms to conceal their identities from exposure in a public forum

Instead of completely open UBO registers, we should aim for controlled transparency with relevant authorities having access to UBO data in robust and verified registers, as happens in territories such as the British Virgin Islands (BVI), whose registers are fairly reliable.

If that’s not to be the case, then the only alternative is to massively bolster the verification process around public registers (as the U.K. has announced for its Companies House system), and employ many more staff to help monitor them, which requires setting a realistic fee for accessing company information.

An old friend of mine, Professor Michael Levi of Cardiff University, and his colleague, criminology Professor Peter Reuter of the University of Maryland School of Public Policy, recently offered a counterargument to mine at an online Commission of Inquiry into Money Laundering in British Columbia (B.C.), Canada. They believe that public access to such registers should be free. Their position relates in part to a decision by the B.C. government to make an open public register of land ownership available free of charge.

One of the professors’ arguments contradicts my position head-on, countenancing open access so that investigative journalists can sift through information at their leisure. Professor Levi says: “A public registry that is online and available to the public shouldn’t automatically have any extra costs attached to it. In which case, the argument for charging is weak. There isn’t much point in having a public registry if it’s so expensive that people can’t use it.”

If we allow open UBO registers, an individual’s right to privacy would be disregarded. Members of the public — and this includes investigative journalists — should not be able to sit themselves down in front of a computer screen and nose around in another person’s business. This disregard for a person’s confidential business is only applied selectively when it supports the position of those advocating open UBO registers.

If we are going to disregard a person’s right to privacy where these registers are concerned, why do we have privacy laws at all? If we have nothing to hide (the go-to phrase for those advocating open public registers), then why don’t we allow people open access to our bank accounts, our finances and our personal income tax returns? Why do we have data protection laws? And why is this quest for disclosure limited to open public registers?

To gain some insight into why the B.C. government is venturing down this route, you will see vocal support from the campaigning NGO, Transparency International (TI).

TI does a great deal of valuable work, but like many similar campaign groups, it appears wedded to the concept of fully open company registers. In one of TI’s reports, titled Opacity, it says: “Beneficial ownership transparency is the single most important tool for fighting money laundering and other financial crime in the real estate sector and beyond.”

How many of TI's members would grant public access to their bank accounts and personal data on the basis that their lives are an open book?

Currently, the government of B.C. is contemplating a charge of $5 per check of the land ownership register. Surprisingly, even this nominal fee is meeting a degree of resistance. Professor Levi told the online commission: “There isn’t much point in having a public registry if it’s so expensive that people can’t use it. The more you charge for those inquiries, the less investigative journalism would be conducted.”

The authors touch on the issue of the U.K.’s Companies House and its shortcomings over the poor quality of publicly available information, due to the organization’s lack of strong data verification processes.

So, if we are to see open public UBO registers, then why not charge a realistic fee to access the information, and then use this money to employ more staff? Not only will this maintain a degree of privacy for individuals, but it will also self-fund the authentication process.

Could this be a common sense solution to a complex problem? Public registers would earn their keep and satisfy the wants of both camps.

The views expressed in this article are the author’s own.

Martin Kenney is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI, focused on multi-jurisdictional fraud and grand corruption cases. In 2014 he was the recipient of the ACFE’s highest honor: the Cressey Award for life-time achievement in the detection and deterrence of fraud. In 2017, 2018, 2019, and 2020 he was chosen as a global elite “Thought Leader” by Who’s Who Legal and also selected as the number one offshore asset recovery lawyer worldwide during 2017 and 2018.

Kenney is a featured speaker at the upcoming virtual Fraud Conference Canada. All sessions have been announced and registration is now open.

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