G-20 finance chiefs to discuss risks to economy, ending secret company ownership

BRUSSELS — Financial leaders of the world’s 20 biggest economies sit down this week to discuss the main risks to global economic growth, and how to clamp down the secretive ownership of companies that allows for tax avoidance and money laundering.

The venue will be a working dinner in Washington on October 6 for G-20 finance ministers and central bank governors before the annual meetings of the International Monetary Fund.

In a paper prepared for participants, China, which holds the rotating presidency of the G-20 this year, notes that global financial markets have recovered from the fallout of Britain’s vote to leave the European Union, but that uncertainties remained.

“Financial volatility picked up recently, partly reflecting market sentiment for the recent release of monetary policy stance by the central banks of key advanced economies,” said the note, seen by Reuters.

“Downside risks remain heightened. Changing expectations regarding the pace of US monetary policy normalisation could have significant repercussions for capital flows and financial market volatilities,” it said.

“The uncertainties from the progress of Brexit would also add to instability risks, while concerns about bank profitability amid extraordinarily low/negative interest rates still persist,” it said.

Following up on a long-standing drive to curb tax avoidance and money laundering as well as terrorist financing, the ministers will discuss a stronger push to share information on who owns companies, in what is known as “beneficial ownership”.

Anonymous companies, also called phantom firms or shell companies, are entities that are used to disguise the identity of their true owner, who ultimately controls or profits from the company. Such owners are also known as the “beneficial owners”.

The ministers will discuss proposals on sharing “beneficial ownership” information prepared for the meeting by the Financial Action Task Force, an inter-governmental policy-making body set up to combat money laundering and terrorist financing.

“These proposals include the possibility of making the ‘availability’ of beneficial ownership information a key focus area,” the Chinese presidency note said, also mentioning the possibility of improving the “quality” of such information.

European delegations to the G-20 meeting will push for establishing registers of beneficial ownership that would at least be shared by public authorities, if not made fully public.

European officials said the push for more transparency in company ownership information has been made more politically attractive to G-20 members by the so-called Panama and Bahama papers —millions of leaked legal documents illustrating how wealthy individuals and public officials are able to keep personal financial information private.