Compiled by the WB's Stolen Asset Recovery team under Emile van der Does de Willebois and titled he Puppet Masters, it is extensive and draws from around 150 corruption cases from 40 jurisdictions. A fundamental discussion throughout the report relates to the notion of determining beneficial ownership; the identification of the person who essentially controls a corporate vehicle, an idea simple in theory but difficult to direct in practice.
It remarks that corrupt officials conceal their association to illegitimate assets by using complicated corporate structures. Also take advantage of the lack of information on beneficial ownership in a number of jurisdictions. These assets may typically be profits resulting from corrupt activity by officials in developing countries, which is then used to purchase investments is western countries. Where the transactions are large, a shell (intermediary) company is regularly used as a conduit to carry out the transaction and conceal the money trail according to the report; where information on this hell company was available, it would transpire to be owned by another intermediary as opposed to a atural person.
The Puppet Masters concluded that converse to the popular belief that offshore financial centres were ax havens, they proved more adept at determining beneficial ownership than their onshore counterparts. According to the report, only five per cent of the corporate vehicles identified in grand corruption schemes were trusts, and they showed up in merely around 15 per cent of investigations.
The report draws a number of recommendations including, ountries should ensure that, whatever definition of beneficial ownership they employ, the beneficial owner is always a natural person.Willebois' report concludes that trust fund companies should be obliged to conduct due diligence on all clients to obtain beneficial ownership information saying, ervice providers should be aware of the dangers of relying on evadable standards, confirmed only by client-provided information and public records.
Highlighting that countries should develop a clear formal standard for identifying standard parties likely to be the beneficial owner but should require deeper inquiry in high-risk scenarios. With regard to cessation of securities with little or no traceability, ountries that have not taken measures to immobilize, dematerialize, or abolish bearer shares (and share warrants) should do so according to the report.
With regard to inactive helf companies, it suggests ountries should attempt to develop a consensus definition as to what constitutes a shelf company, and should take measures to render this type of company more visible to the authorities and less desirable to illicit actors
