Strengthening Beneficial Ownership Transparency in ASEAN Member States

The Financial Action Task Force (FATF) has revised Recommendations 24 and 25 to enhance beneficial ownership transparency measures. This article provides an overview of the current status of these recommendations among focus states in ASEAN Member States and Timor-Leste.

Current Compliance Status

Focus states have varying levels of compliance with FATF Recommendations 24 and 25, which assess the effectiveness of their anti-money-laundering/countering the financing of terrorism (AML/CFT) obligations. While some focus states receive “low level of effectiveness” ratings for IO 5, others are deemed “partially compliant” or “largely compliant” with these recommendations.

Legal Frameworks and Definitions

All focus states have established legal frameworks that include a definition of the term “beneficial owner.” The definitions vary across countries:

• Four focus states (Cambodia, Lao PDR, Thailand, and Viet Nam): The definition is primarily set out in AML/CFT obligations.
• Seven focus states (Brunei Darussalam, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, and Timor-Leste): The definition is set out in relation to the formation and maintenance of legal persons and arrangements.

Terminology and Scope

The majority of focus states use the term “beneficial owner,” while Brunei Darussalam and Singapore use the term “controller” in their legal frameworks. All focus states define beneficial ownership with reference to natural persons, although Singapore specifically distinguishes between “corporate controllers” and “individual controllers.” Most cover the concept of direct and indirect ownership, although this is less clear for Lao PDR.

Ownership Thresholds

The specific ownership thresholds used by focus states to determine beneficial ownership range from five to 25 per cent. The majority of focus states also define control through other means, including voting rights, with all focus states except Lao PDR and Viet Nam covering this concept.

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