Speaking to FMT, TI-M president Akhbar Satar noted that last year’s Panama Papers expose highlighted the complex ways used by companies and individuals to conceal beneficial owners.
Financial website Investopedia defines a “beneficial owner” as a person who enjoys the benefits of ownership even though the title to property is in another name. The term also denotes any individual or group of individuals who, either directly or indirectly, have the power to vote or influence transaction decisions on a specific security, such as shares in a company.
Akhbar said the law he was proposing would “help curb corruption and money laundering, including any money laundering which may be happening in our own backyard in Kuala Lumpur or Labuan”. Labuan is an offshore financial centre.
The end game, Akhbar said, was to stop the proceeds of corruption and organised crime from being laundered through investments in high-value properties in Malaysia.
“What I’m proposing is nothing that hasn’t already been done before,” he said. “In the UK, there is a public register of beneficial ownership. In the US, financial institutions collect information on significant beneficiaries of legal entities.”
Akhbar said Malaysia should have a central registry to keep tabs on ownership of companies registered in Malaysia and those keeping funds in Labuan.
“The goal is provide greater transparency as to who really controls a company,” he said. “This helps ensure that corrupt officials, including politicians, are not awarding themselves or their cronies or friends government contracts without proper scrutiny.”
The availability of such information to the public, he said, would make it difficult for white collar criminals to hide their dirty money and would help in the detection of tax evasion and money laundering.
The leakage of the Panama Papers last April gave financial and attorney-client information relating to more than 214,000 offshore entities. About 2,000 Malaysians were named.
Last May, Bank Negara Malaysia governor Muhammad Ibrahim said the central bank had not yet found any Malaysian violating banking rules, but added that it would not hesitate to investigate should it discover any such case.
He said Malaysia had liberal rules to allow residents to open foreign currency accounts. However, he added, they must get Bank Negara’s approval if their external borrowings exceeded certain amounts. The limit is RM100 million for corporations and RM1 million for individuals.