On 7 March 2022, the Financial Action Task Force (FATF) issued a public statement regarding amendments it had adopted to Recommendation 24 and its Interpretative Notes on 4 March 2022. The Recommendation requires countries to prevent the misuse of legal persons for money laundering or terrorist financing and to ensure that there is adequate, accurate and up-to-date information on the beneficial ownership and control of legal persons.
The FATF explains that the amendments to Recommendation 24 follow two rounds of public consultation and are an important first step following mutual evaluations that show that countries need to do more to implement the current FATF standards. The revisions to Recommendation 24 require countries to follow a risk-based approach and consider the risks of legal persons in their countries. Among other things the changes specify that access to information by competent authorities should be timely, and information should be adequate for identifying the beneficial owner, accurate (based on verification) and up-to-date. The revisions also require countries to ensure that public authorities have access to beneficial ownership information of legal persons in the course of public procurement. Furthermore the changes include stronger controls to prevent the misuse of bearer shares and nominee arrangements, including prohibiting the issuance of new bearer shares and bearer share warrants and conversion or immobilisation of the existing ones, and more robust transparency requirements for nominee arrangements.
To facilitate countries’ implementation of beneficial ownership registries, the FATF will also analyse the growing practical experience of implementing beneficial ownership registries, with a view to identifying best practices and supporting implementation by countries.
The FATF reports that it will also start the process of revising its methodology for assessing the new obligations. The FATF is, in parallel, reviewing Recommendation 25 on beneficial ownership of legal arrangements, with a view to ensuring consistent where relevant and appropriately tailored beneficial ownership standards and smooth implementation. As part of a phased approach, the FATF will begin assessing jurisdictions for implementation of the revised requirements at the start of the next (fifth) round of mutual evaluations.
The FATF expects all countries to take concrete steps to implement these new standards promptly, and to determine the appropriate sequence and timeframe for implementation at national level.