Liberia’s Complex Web of Financial Compliance Regulations: Unraveling the Definition of Beneficial Ownership
In the intricate labyrinth of Liberia’s financial compliance regulations, the definition of beneficial ownership has emerged as a seminal issue. This article explores the four definitions of beneficial ownership in Liberia, highlighting critical similarities and differences.
Understanding Beneficial Ownership
The Open Ownership Principle advocates for clear, robust, and consistent definitions of beneficial ownership to ensure transparency and effective implementation of anti-money laundering (AML) and combating the financing of terrorism (CFT) measures. The concept of beneficial ownership refers to the natural person(s) who ultimately own or control an entity, having the advantage of the proceeds of an illegal activity.
Key Definitions in Liberia
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Robust Definitions: In Liberia, all definitions of beneficial ownership recognize the association between a natural person and their ownership or control over an entity, regardless of sectoral specificity.
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In-country Assessment: Four Liberian regulations acknowledge natural persons as beneficial owners: 1) Liberia’s 2020 Associations Law, 2) Disclosure of Ultimate Beneficial Ownership (DUBO) Regulation 2020, 3) the 2013 AML/CFT Regulations for Financial Institutions, and 4) the Regulation on Enhanced Due Diligence in the Provision of Financial Services for Politically Exposed Persons (PEPs).
Important Concepts and Terms
Associations Law
- Defines “ultimate effective control” and “ultimate ownership” to clarify what constitutes control and ownership.
- However, it does not provide examples of complex ownership structures or indirect arrangements.
Disclosure of Ultimate Beneficial Ownership (DUBO) Regulation 2020
- Identifies a controlling person as a natural person holding more than 25% of shares, voting rights, ownership of capital, profits, or management control.
- Requires companies to disclose individuals who own 5% or more shares, stock, or control.
Comparing Definitions
| Component of the definition | Associations Law 2020 | Disclosure of Ultimate Beneficial Ownership Regulation 2020 | AML/CFT Regulations for Financial Institutions in Liberia, 2013 | Regulation on Enhanced Due Diligence for Politically Exposed Persons |
|---|---|---|---|---|
| Natural person | Yes | Yes | Yes | Yes |
| Ownership and control | Yes | Yes | Yes | Yes |
| Threshold | No | Individuals with 5% or more shares, stock, control | N/A | N/A |
Conclusion
Liberia’s financial compliance regulatory landscape acknowledges the natural person’s role in exercising ownership and control as part of various definitions of beneficial ownership. To maintain transparency and ensure the effective implementation of AML and CFT measures, it is crucial to continue the conversation in Liberia about establishing consistent, clear, and robust definitions of beneficial ownership in primary legislation with sufficiently low thresholds to capture most relevant ownership interests.