Transparency International Georgia Calls for Implementation of Beneficial Ownership Transparency in Georgia

Introduction

In light of Russia’s full-scale invasion of Ukraine and subsequent sanctions imposed by Western countries, the importance of beneficial ownership transparency has become increasingly apparent. Georgia, which is heavily reliant on Russia economically, needs to establish a register of beneficial owners (BO) to mitigate risks associated with Russian capital.

The Importance of Beneficial Ownership Transparency

• A BO register will help identify and track foreign capital in Georgia, reducing the risk of money laundering and terrorist financing.
• It will also promote transparency and accountability in the country’s business sector.

Current Challenges

• Lack of uniform standard: The concept of beneficial ownership is defined differently across various laws in Georgia, including the Law on Facilitating the Suppression of Money Laundering and Terrorism Financing and the Law on Broadcasting.
• Scattered information: Georgia already collects information on beneficial owners through various means, but this information is scattered across different websites and databases, making it difficult to access and track.

Recommendations

Creating a Unified BO Register

• The government should bring together existing data on beneficial owners and make it publicly available in open format.
• This will enable searches for previous owners of companies and individuals who have owned specific companies in the past, as well as linking companies and individuals through hyperlinks.

Disclosure Requirements

• One-time disclosure of beneficial owners is necessary for all foreign (non-resident) companies registered in Georgia, with subsequent updates required when changes are made to the company’s information.
• Disclosure of shareholders of joint-stock companies is also essential, as current information on shareholders is not publicly available.

International Standards

• The government should use the Beneficial Ownership Data Standard to ensure compatibility with foreign registries that use the same standard.

Conclusion

By implementing beneficial ownership transparency, Georgia can reduce risks associated with Russian capital and align itself with international best practices. The government should prioritize this initiative to promote good governance and accountability in the country’s business sector.