Can beneficial ownership transparency really be compatible with data protection?

Tom Walker

This blog post was co-written by Zosia Sztykowski, Project Lead, OpenOwnership and Tom Walker, Research Manager, The Engine Room. It originally appeared on the Open Government Partnership stories blog.

In recent years, we’ve seen significant progress on clamping down on the abuse of anonymous company ownership through beneficial ownership transparency, both from international bodies like the OECD, G20 and EU, and by leading governments such as the UK, Denmark, Ukraine and Slovakia. Increasingly, policymakers are recognising the benefits of being able to “follow the money” across borders, and are leaving fewer places for money launderers to hide.

But as this momentum builds, so do concerns around the protection of personal data, as scandal upon scandal sweep the tech world. Beneficial ownership information is a different class of information than what’s described in these scandals, given that it is related to the ability of a beneficial owner to operate in a certain market (rather than provided voluntarily to a private entity). However, it’s important to ask: can we balance beneficial ownership transparency with the principles of data protection, and if so, how?

OpenOwership and The Engine Room, a member of the responsible data community, are proud to be partnering on research around this question. A responsible data approach involves assessing the unintended consequences of working with data by prioritising people’s rights to consent, privacy and security while respecting the values of transparency and openness. Through this lens, protection of the right to privacy is seen not as a barrier in the way of transparency, but as a foundational element that can strengthen the community’s efforts to address corruption, fraud, organised crime and tax evasion.

We’ve also partnered with The B Team to ensure that this research directly addresses the concerns of the private sector and business owners. In a landscape of vastly different data protection regimes, what risks are companies exposing themselves to by disclosing personal data about their beneficial owners (who may or may not be located in the same jurisdiction)?

Since privacy (and by extension data protection) is essentially about individual rights, the research borrows from human rights, exploring three interlinked questions:

  • Is publishing beneficial ownership data in central public registers lawful?
  • Is publishing beneficial ownership data in central public registers an effective way of meeting a legitimate aim?
  • What are the potential impacts to privacy of public beneficial ownership registers, and can they be minimised or mitigated?

As part of this work, we will be reviewing the relationship between data protection and beneficial ownership legislation in a selected set of jurisdictions, as well as analysing the broader privacy and responsible data implications for both governments and companies in publishing ownership data publicly. Our findings will provide practical guidance to both governments implementing beneficial ownership transparency, as well as companies complying with beneficial ownership requirements.

We’re pleased to be presenting early findings from this research at the International Anti-Corruption Conference (IACC) in Copenhagen.

Email zosia@openownership.org to join us, or keep an eye on Twitter for the launch of the research in November.

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