WHO ARE THE REAL OWNERS?

Posted by AsiaViews | Mar 18, 2018 | 0 |

INDONESIA

The Jakarta Post-Mar 13

Companies and other business entities, including foundations and trusts, can no longer hide the identity of their real controlling owners after the enactment earlier this month of Presidential Decree No. 13/2018 on the compulsory disclosure of real beneficial ownership.

The regulation, which complements the global treaty on the automatic exchange of information between tax authorities, defines a true beneficial owner as an individual who owns more than 25 percent of the shares of a business entity, holds more than 25 percent of the votes, receives more than 25 percent of the annual profits and has the authority to appoint, replace and dismiss members of the boards of management and commissioners.

It has thus far been extremely difficult to track the real beneficial owners of assets that are held by entities and other legal arrangements like shell companies, foundations and trusts, especially if they are held in or via secrecy jurisdictions or well-known tax haven territories.

As the Paradise Papers that were leaked last year have shown, many businesspeople, officials and criminals can hide behind layers of anonymous companies, trusts and foundations and can easily commit crimes such as tax evasion and money laundering. The persons nominally listed as in control could in fact be a proxy for the persons wielding power and influence, who ultimately gain financial benefits from the company or asset.

They manipulate the very concept of ownership. Even if there is full transparency it still wouldn’t be clear who owned the assets held in a trust. Companies are often owned by “nominees” — typically lawyers or other companies acting as the legal owners of assets, but which are in reality merely shields or fronts hiding the true owners of the assets.

In many tax haven territories, nominee directors or shareholders can be used as a vehicle to mask the identity of a beneficial owner, thereby making it difficult to identify the true beneficial owner of an entity. This issue has often been made more complex as there are many different laws governing company registrations and management in different countries.

Hence, the disclosure of beneficial ownership information will undoubtedly support the drive against corruption, tax evasion and money laundering. The new regulation will help track down financial crime and money laundering, catch criminals, curb tax evasion or other predatory market behavior by uncovering the true owners of assets.

The regulation also provides to the public access to information on the true beneficial owners of business entities, including cooperatives and foundations, in a bid to strengthen the oversight of business.

The new decree and the 2017 law that provides tax officials access to the financial information and bank accounts of taxpayers for tax purposes will greatly empower the tax authority to hunt down tax evaders.

The Corruption Eradication Commission (KPK) and the Financial Transactions Analysis and Reporting Center (PPATK) will greatly be helped by the regulation to uncover corruption and money laundering.

(First published in The Jakarta Post – http://www.thejakartapost.com/academia/2018/03/13/editorial-who-are-the-real-owners.html)

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EXTRICATING NDONESIAN CHILDREN FROM ISIS INFLUENCE ABROAD

Indonesia urgently needs to revisit the possibility of repatriating the neediest of its young citizens stranded abroad, whose families had earlier joined ISIS. Most of these children are in camps in northern Syria but there are also small numbers in the Philippines, Afghanistan and Iraq. “Extricating Indonesian Children from ISIS Influence Abroad”, the latest report from the Institute for Policy Analysis of Conflict (IPAC) argues that the government could begin by bringing back small groups of unaccompanied children under ten years of age, who pose minimal security risk and are most vulnerable to deteriorating conditions in the camps.“The problem is that health and security conditions are worsening by the day in the Syrian camps, and the children are growing older,” says Dyah Kartika, IPAC analyst. “They need access to schools, a nurturing environment, and medical attention. If the government waits too long, the children will be further exposed to ISIS ideology.” The new report examines a 2019 list of Indonesians in camps and prisons run by the Kurdish Syrian Democratic Forces (SDF). The Indonesian government has been trying to verify their citizenship, but with pseudonyms, misspellings and bad transliterations, it is a daunting task. At the time the data was collected, between March and June 2019, there were 555 Indonesians in SDF camps and prisons, including 367 children. Among the children, approximately 277 were under the age of ten and 34 were unaccompanied. In June 2021, there are fewer than ten children who are both unaccompanied and under the age of ten that could be prioritized for return. Bringing back children of ISIS families is no easy task. The report analyses the main challenges faced by the Indonesian government. These include definitional issues, bureaucratic competition, the difficulty of verifying nationality, evaluating the toll of exposure to conflict, assessing security risk, and finding relatives or others willing to provide care once the children are returned. In addition, COVID has meant stringent restrictions on travel, placing further obstacles in the way of repatriation. There are several models for rehabilitation of children exposed to violent extremism in Indonesia that could be modified to accommodate the needs of children repatriated from abroad. The report examines these models and argues that the government does not need to have every detail of rehabilitation programs in place before it starts extricating children from ISIS influence. It can start by bringing back the most vulnerable children and then modify programs as needed.

“It’s important that the government see these children as victims” says Dyah. “They deserve a chance to be children again.”

WHO ARE THE REAL OWNERS?