Ecuador Moves Closer to Boosting Financial Transparency with Beneficial Ownership Disclosure

Ecuador has made a significant move towards enhancing financial transparency by committing to disclose the true owners or controllers of companies and other corporate entities through the establishment of a beneficial ownership register. This step aims to deter illicit activities associated with shell companies used to conceal true owners and financial transactions.

Aligning with Global Standards

The Financial Action Task Force (FATF) Recommendation 24, endorsed by over 200 jurisdictions worldwide, requires countries to ensure that beneficial ownership information is held by a public body functioning as a beneficial ownership register or an alternative mechanism that enables efficient access to the information. Ecuador’s decision to implement a beneficial ownership register aligns with this global standard.

Enabling Environment for Success

According to experts, having an enabling environment that fosters cooperation between government agencies and civil society organizations has been instrumental in the successful implementation of beneficial ownership registers in several countries. In Ecuador’s case, high-level political commitment and advocacy from local stakeholders are expected to play a crucial role in driving the reform forward.

Location of the Register

The location of the beneficial ownership register is also critical, with options ranging from the tax authority to the business registration authorities or even the Ministry of Justice. Ecuador has chosen to house its register within the business registration authorities, which will enable real-time access and interoperability with existing government systems.

Standardization and Compliance

To ensure consistency and seamless data exchange, Ecuador can adopt a standardized format like the Beneficial Ownership Data Standard (BODS). Additionally, increasing compliance in applying sanctions and promoting awareness of disclosure requirements among reporting entities is essential to prevent inaccurate and outdated information from entering the register.

Measuring Outcomes

Measuring outcomes is also crucial to gauge the impact of beneficial ownership reforms on corruption and tax compliance. Ecuador can learn from international best practices, including the use of outcome measurements and financial sustainability considerations to ensure the long-term effectiveness of its beneficial ownership register.

International Support and Cooperation

The World Bank has offered technical assistance and shared knowledge with countries implementing beneficial ownership registers, and is set to deepen its emphasis on this agenda through its Global Anticorruption Program and operations in regions around the world. With Ecuador’s commitment to beneficial ownership disclosure, the country is poised to join the ranks of nations taking a significant step towards curbing corruption and promoting financial transparency.

Key Takeaways

• Ecuador has committed to disclosing the true owners or controllers of companies and other corporate entities through a beneficial ownership register.
• The move aims to deter illicit activities associated with shell companies used to conceal true owners and financial transactions.
• The country’s decision aligns with global standards set by the Financial Action Task Force (FATF) Recommendation 24.
• Ecuador has chosen to house its register within the business registration authorities, enabling real-time access and interoperability with existing government systems.