Civil Society Workshops on Beneficial Ownership Transparency (BA0010)

Which public issue does the obligation address? Regulating the beneficial ownership issue and establishing the Register of Beneficial Owners is closely linked to the prevention of money laundering and financing of terrorist activities. The 2018 FATF Guidance Transparency and Beneficial Ownership2 states that the Recommendation 243 applies broadly to “legal persons” meaning any entities, other than natural persons, that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities that have legal personality. This can include non-profit organisations (NPOs) that can take a variety of forms which vary between jurisdictions, such as foundations, associations or cooperative societies. In particular countries should review the ML/TF risks associated with these other types of legal person, take into account their different forms and structures and, based on the level of risk, determine measures that will achieve appropriate levels of transparency. Additionally, competent authorities should have timely access to adequate, accurate and timely beneficial ownership information for these other types of legal person. According to the Report of the European Commission on the assessment of the risks of money laundering and terrorist financing affecting the internal market and relating to cross-border activities, Non-profit organisations (NPOs) may be exposed to the risks of being misused for TF purposes. The analysis of the NPO's sector vulnerability to TF has been rather challenging as this sector is characterised by a variety of structures and activities which present varying degrees of risk exposure and risk awareness. This is mostly due to the diverging NPO landscape and differences in legal frameworks and national practices. “Expressive NPOs” present some vulnerability because they may be infiltrated by criminal or terrorist organisations that can hide the beneficial ownership making the traceability of the collect of funds less easy, while some types of “Service NPOs” are more directly vulnerable due to the intrinsic nature of their activity. 4 The document of the Ministry of Security of BiH Assessment of Risk of Money Laundering and Financing of Terrorism in Bosnia and Herzegovina for the Period from 2018 to 2022 also states that It is estimated that there is a high risk of vulnerability to money laundering based on analysis of 16 variables inherent and intermedium for practice of NGO sector in Bosnia and Herzegovina. 5 The report states that there is Insufficient awareness of the NGO sector on anti-money laundering/counter-terrorist financing and that Awareness raising of the NGO sector on the AML/CFT is needed.“6 Therefore, this obligation will address the challenge and obligation of regulating the issue of beneficial ownership of NGOs, and seek to raise awareness and inform NGOs about the importance of the beneficial ownership. This satisfies the need for security and responsibility in using the funds as a public need to provide financing of those activities for which the funds are intended. In addition to that, this measure satisfies the public need for national security in terms of combating the financing of terrorism.

What is the obligation? The obligation includes holding of eight (8) workshops for civil society organisations on the beneficial ownership, where the civil society organisations will be thoroughly informed about this issue in the context of increasing transparency, combating money laundering and financing of terrorist activities, and making reports and possible recommendations from the held workshops.

How does the obligation contribute to resolving the public issue? Implementation of this obligation should thoroughly educate the civil society organisations about the beneficial ownership, as well as about the obligations of all legal persons, which will enable greater transparency and more effective fight against money laundering and financing of terrorist activities, where civil society organisations play a particularly important role.

Why is this obligation relevant to the OGP values? Regulating the beneficial ownership issues, as well as establishing the Register of Beneficial Owners is closely related to the prevention of money laundering and financing of terrorist activities, i.e. directly affects the three key OGP priorities: - Transparency - Fight against corruption - Beneficial ownership Implementation of this obligation will enable better understanding of the benefits and importance of opening data on the beneficial ownership of civil society organisations, i.e. non-profit organisations, which are often exposed to the risk of money laundering and financing of terrorist activities.

Goals/activities

Determine the manner and locations for holding workshops 1 February 2023 - 14 February 2023

Prepare and publish a call for workshops 1 March 2023 - 1 April 2023

Hold 8 (eight) workshops and develop reports and possible recommendations 1 May 2023 - 1 May 2024

Action Plan Review

Commitment 3. Raising awareness and familiarizing civil society organizations with the importance of beneficial ownership issues

● Verifiable: Yes

● Does it have an open government lens? Yes

● Potential for results: Unclear

Commitment 3 on raising awareness about beneficial ownership transparency among civil society organizations also has unclear potential for results. A Ministry of Justice representative says that this commitment constitutes a small step toward setting up a beneficial ownership registry. Greater steps are needed to update the anti-money laundering legislation and avoid BiH being listed by the Financial Action Task Force as a jurisdiction under increased monitoring for strategic anti-money laundering deficiencies. While acknowledging the commitment’s limited ambition level, civil society representatives note the potential benefits of learning more about beneficial ownership issues.