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Ecuador Falls Short in Ensuring Transparency on Beneficial Ownership

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A recent peer review report by the Organisation for Economic Co-operation and Development (OECD) has highlighted concerns over Ecuador’s lack of uniformity in ensuring transparency on beneficial ownership. The report, which evaluated Ecuador’s compliance with international standards on exchange of information, revealed several gaps in the country’s legal and regulatory framework.

Lack of Transparency

According to the report, Ecuador lacks explicit provisions requiring the availability of beneficial ownership information for foreign trusts administered in the country or those with a trustee resident in Ecuador. This lack of transparency makes it difficult to identify the parties and beneficial owners of these entities, which can pose risks to tax compliance and money laundering.

Unclear Accounting Records Requirements

The report noted that Ecuador’s accounting records requirements are unclear, leaving doubts over who would be responsible for keeping records and where they should be kept if an entity ceases to exist. The country is also recommended to ensure that accounting information and underlying documents are available for a minimum of five years after an entity ceases to exist.

Exchange of Information Mechanisms

The report highlighted concerns over Ecuador’s exchange of information mechanisms, which need to be improved to provide effective exchange of information with partner jurisdictions. Specifically, the country is recommended to:

• Clarify the scope of professional privilege to ensure it conforms to international standards
• Improve its procedures for requesting and providing information under its network of agreements

Recommendations

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The OECD report made several recommendations to Ecuador aimed at improving transparency on beneficial ownership and ensuring effective exchange of information with partner jurisdictions. These include:

• Ensuring that adequate, accurate and up-to-date beneficial ownership information is available for all account holders
• Clarifying the scope of professional privilege to ensure it conforms to international standards
• Improving accounting records requirements to ensure that information is available for a minimum of five years after an entity ceases to exist
• Strengthening exchange of information mechanisms to provide effective exchange of information with partner jurisdictions

Conclusion

The report concludes that Ecuador needs to take concrete steps to address these concerns and improve its transparency and cooperation in the exchange of information.