Publication of the Wolfsberg Group-IIF joint response to the FATF’s public consultation on its Risk-Based Guidance on Recommendation 25

The Wolfsberg Group and the IIF jointly responded to the FATF public consultation (see eventid=23946) on its Risk-Based Guidance on Recommendation 25 (Beneficial Ownership and Transparency of Legal Arrangements).
The Wolfsberg Group and IIF assert that ensuring the provision of competent authorities and regulated entities with accurate, verified, and up-to-date BO information is crucial for effectively combating financial crime. They emphasize that regulated entities should be able to depend on this information to fulfill their financial crime risk management obligations, including customer due diligence.
Expressing appreciation for the opportunity to contribute to the FATF’s efforts, the organizations support the objective of strengthening international standards related to the beneficial ownership of legal persons and legal arrangements. They stress the importance of timely access to reliable BO information for competent authorities and regulated entities. The registry approach is recommended, and countries are urged to adopt it, with a call for assessment during Mutual Evaluations.
The organizations emphasize that financial sectors should rely on BO registers, and the primary responsibility for ensuring the accuracy of information rests with reporting legal persons and arrangements. They argue that redundant verification by the financial sector is inefficient, questions the register’s reliability, and does not enhance AML/CFT efforts.
Addressing specific issues raised by the FATF, the organizations welcome the possibility of trustees taking a risk-based approach in holding information about objects of power. They align with the Society of Trust and Estate Practitioners on jurisdictional treatment of trust administration activities and encourage the FATF to consider the utility of BO registers in cross-border situations.
Observing industry trends, the organizations recommend encouraging jurisdictions to require licensing of professional trustees. They provide specific feedback, suggesting a risk-based approach for CDD in indirect relationships, emphasizing no continuing CDD obligation after a change in authority, and proposing reliance on trustee attestation for verifying trust beneficiaries.
Furthermore, the organizations advocate for simplified CDD in low-risk Legal Arrangements, effective sanctions for failing to grant timely access to information, and the establishment of a threshold for reporting material discrepancies in BO registers. They recommend the FATF’s support in proposing consistent data formats for BO registers across countries to enhance usability and cross-border cooperation.