Early in February I attended (online) a regional Pacific forum run by UNDP. Pacific regulators, international experts and financial businesses discussed the risks of opaque company and trust arrangements operating in and across the Pacific, and how beneficial ownership transparency could mitigate those risks.
We heard about international standards, including from the Financial Action Task Force and the EU, and about the challenges and successes in Pacific countries where they have or are establishing greater transparency.
No matter what their size, Pacific nations have faced the consequences of opaque financial deals. These use legal structures to squirrel away fraudulent funds by creating the appearance of varied ownership or hiding the origin of funds. These systems are used as part of drug deals, tax evasion, corruption and fraud.
Local examples include direct procurement corruption and bribe paying (Naaru), tax evasion revelations (Samoa) and abuse of foreign controlled trusts in New Zealand by fraudsters in Malaysia, Slovakia and (more recently alleged) the Seychelles.
Many attendees across Pacific regulatory agencies and businesses commented on the high value of the conference in enabling them to think about the application of international standards to their context. They talked about gaps in their legislation (e.g. in Fiji the Registration Act goes back to 1879), limitations on resources, and limited compliance tools. They talked about costs and benefits. And they talked about the ‘so what’ – why is more transparency needed?
The conference was very helpful, in both theory and practical application.
With lower financial and human resource capacity than New Zealand, Pacific Islands face the same challenges as New Zealand. TINZ advocates for much greater transparency of those who control companies, limited partnerships and trusts here, and that was validated by what I learned. It also helped my thinking around how TINZ could contribute towards advocacy or research on opaque financial systems in the Pacific.
The key takeaway stated by many participants is the ‘why’. Greater transparency of those who ultimately control legal entities and arrangements like trusts and companies, aligned with cross agency and data sharing, reduces organized crime and corruption, drug offending and money laundering. It also supports the integrity of a nation’s financial system.
