Guyana yet to put system in place to verify beneficial ownership information

Mar 03, 2023 News

…does not enforce $40M fine, three year jail sentence for non-submission of data – Report

Kaieteur News – A recent report on Guyana’s vulnerability to money laundering has highlighted the absence of systems to verify information on the true beneficiaries of registered companies. The report notes that beneficial ownership is clearly defined within the nation’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) legislation, adding that competent authorities have the power to request this information.

Despite having the legislative backing, the report notes that the Commercial Registry is incapable of effectively carrying out its duties in this respect. The report states that the registry is still in the process of establishing an up-to-date electronic Beneficial Ownership database/register that can be accessed by competent authorities, reporting and other entities.

Further, it was noted that Guyana’s business sector encompasses unincorporated family-owned businesses, incorporated medium and large corporations owned and operated by mainly locals and to a lesser extent regional and international investor groups. It states that there has been an increase in annual registration of businesses with 3,474 entities registered in 2016; 3,876 in 2017; 7,688 in 2018; and 13,892 in 2019.

Section Two of the AML/CFT Act defines beneficial owner as having ownership of at least 25% of the total shares. Section 470(A) of the Companies Act was also amended to empower the Registrar of Companies to request beneficial ownership information for companies. The Act also gives investigators the power to request information on corporate structures, shareholders and legal entities.

Kaieteur News understands that an AML Unit was established within the Commercial Registry to capture and maintain beneficial ownership information for legal entities. Beneficial ownership information collected by the Commercial Registry includes individual names, addresses, national and tax identification details and percentage of beneficial ownership, which can be requested in writing by Competent Authorities, Reporting Entities or other entities operating within Guyana or from abroad and the information is provided once available.

The report states that there is currently no system in place to verify beneficial ownership information prior to incorporation. The beneficial ownership information only becomes available after filing/incorporation or registration of a business. Moreover, while the legislation provides for a fine of $10M-$ 40M and imprisonment of up to three years for non-submission of information; the report states that there is no strict enforcement.

A survey of reporting entities also revealed that it is “moderately difficult” to obtain such information. Under the AML/CFT Act, lawyers and other legal professionals, accountants and real estate agents, as reporting entities, are required to adequately identify and obtain beneficial ownership information from their clients. However, there is no indication that this is being done, the report states.

As it relates to acting as a nominee, the document states that lawyers and other legal professionals, accountants and real estate agents, are not required under the law to disclose to the company’s registry that they are nominees, and the identity of the person who nominated them.

There is also no evidence received to suggest that a criminal was identified as a beneficial owner of a legal entity, however, there is currently inadequate electronic databases of criminal records and beneficial information. In light of this, the report states that sufficient checks may not have been carried out or could not be carried out on beneficial ownership prior to the registration of their interest in new or existing legal entities.

It therefore means that the possibility exists that an individual with a criminal background can be a beneficial owner of a legal entity without the knowledge of the competent authorities and reporting entities.

• Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), beneficial, Commercial Registry, Guyana, ownership