Lifting the veil on beneficial ownership

Abstract

Purpose This paper aims to critically explore the challenges facing the UK in implementing registers of beneficial owners, a measure mandated by the EU’s anti-money laundering (AML) directive to enhance beneficial ownership transparency. Design/methodology/approach This study systematically reviews the literature surrounding beneficial ownership transparency to critically analyse the extent to which challenges facing the UK, impact upon its ability to successfully implement registers of beneficial owners. Findings This study demonstrates that a lack of beneficial ownership transparency facilitates money laundering by concealing corrupt wealth and frustrating authorities’ efforts to trace illicit finance. It demonstrates that implementing registers of beneficial owners may be a superficial approach to tackling the multifaceted problem of money laundering. Better intergovernmental cooperation is required to improve beneficial ownership transparency and to ensure measures to curb offshore money laundering are successful. Research limitations/implications This research focuses on one aspect of AML control from the UK’s perspective. Further work is needed to investigate the concerns from the perspective of offshore jurisdictions and how global AML rule affects developing economies. Practical implications The study informs policymakers and other professionals implementing the UK’s registers of beneficial owners to enhance future strategies and better combat offshore money laundering. Originality/value This is the only study to explore the challenges facing the UK in implementing registers of beneficial owners, thus providing novel insight into the moral, legal and practical dilemmas to imposing AML control.

Reexamining the anti-money-laundering framework: a legal critique and new approach to combating money laundering

“…Money laundering operates through both street-level and highend commercial realms. Street-level business settings are ideal conduits for illicit cash to enter the financial system (Gilmour and Ridley, 2015;Gilmour, 2016), whereas, high-end commercial realms, such as offshore overseas jurisdictions and freeports, offer favourable environments for the money launderer because of their strict secrecy, limited supervision and looser trading agendas (Gilmour, 2020(Gilmour, , 2022Webb, 2020). These locations may promote crime by stimulating demand for illicit goods and services and fuelling competitive commercial practices (Passas, 1999).…”

“…Furthermore, the characteristic transnational and cross-border nature of money laundering means authorities may find it more difficult to trace funds that have been laundered overseas. Authorities may face several legal, moral and practical barriers to combating money laundering or other financial crimes (Gilmour, 2020). Their struggles with fragmented and sometimes obstructive AML laws within overseas jurisdictions are worsened by complicated and lengthy legal or corporate processes (Gelemerova, 2011).…”

“…Recent offshore banking scandals have revealed the offshore space in which money laundering can flourish. They have exposed the widespread and organised scale of the banking sector to facilitate money laundering and other illicit activities through offshore jurisdictions (Gilmour, 2020(Gilmour, , 2022. These offshore spaces arise through their favourable legal frameworks that welcome overseas investment and serve to loosen cross-border trade barriers inherent in other jurisdictions.…”

“…The process in which money is laundered has been subject to much debate. It has traditionally centred upon a three-stage model of placement , layering and integration that forms the foundation of governments’ understanding about the money-laundering process (Gilmour, 2020; Hopton, 2009; Soudijn, 2016). Money laundering is typically represented as a sequential practice that first involves illicit funds being placed into the financial system.…”

Challenges for financial institutes in implementing robust customer due diligence in Pakistan

“…In most jurisdictions, bank officers collect information and punch it into a computer system rather than verify it (Shust and Dostov 2020). It leads to incoherent compliance (Gilmour, 2020; Ball et al , 2020). FIs need increased training and education for performing their duties; failure to achieve this will result in superficial compliance or breaches (Thompson, 2018; Naheem, 2018).…”