Prof. Louis de Koker and Prof. Andrew Haynes

Supply Chain Risk Management: Supporting Transparency of Corporate Beneficial Ownership

The legal and reputational risks linked to transactions involving organised crime, money laundering, terrorist financing and corruption are significant, increasing the pressure on businesses to identify beneficial ownership of counterparties and suppliers. In the past corporate law and corporate regulators have not actively facilitated the transparency of corporate ownership. International money laundering and terrorist financing standards, the Forty Recommendations of the Financial Action Task Force, increased pressure on financial institutions to probe beneficial ownership of corporate customers. The ability of these institutions to determine beneficial ownership is however limited without sufficient assistance by the government. As a result, the latest iteration of the standards requires countries to ensure ‘that either: (a) information on the beneficial ownership of a company is obtained by that company and available at a specified location in their country; or (b) there are mechanisms in place so that the beneficial ownership of a company can be determined in a timely manner by a competent authority.’

This paper will consider the relevance of beneficial ownership due diligence in supply chain risk management with specific reference to the UK’s public register of beneficial ownership, the people with significant control register, established in 2016. The UK is considering further enhancements to its beneficial ownership transparency scheme and these proposals will also be discussed.