07/12/20

SOUTH AMERICA: Colombia mulls new beneficial ownership rules.

As published on internationalinvestment.net, Friday 4 December, 2020.

The Colombian Congress has introduced a bill to reinforce transparency and tackle corruption by creating a beneficial ownership registry, in line with international recommendations.

The Beneficial Ownership section of the bill defines the principle of due diligence and of BOs, to recognise "the natural person(s) benefited according to their actions and/or participation in a legal person" (Art. 19 and 20 of the bill).

The bill will consider as a final beneficiary the natural person that has 5% or more of ownership or voting powers, as well as a 5% or more of the assets, profits or benefits.

Corporate vehicles such as limited companies, limited liability partnerships and trusts, etc are at the heart of many tax evasion and money laundering schemes, as activities are not carried out in the name of real/natural persons, but by "legal persons" instead behind whom real controlling persons are concealed by the "corporate veil".

The UBO information is necessary to detect and prevent tax evasion, corruption, money laundering, terrorist financing, and other illicit behavior involving one or more companies or legal persons.

Public trust in companies and markets largely depends on the existence of an accurate disclosure regime that provides transparency in the beneficial ownership and control structures of companies.

Colombia is also proposing the creation of a Registro Único de Beneficiarios Finales (Sole Registry of Final Beneficiaries) - or, RUB - ( managed by the Dirección de Impuestos y Aduanas Nacionales - DIAN (National Tax and Customs Directorate).

High-level entities such as the Contraloría General de la República (Comptroller General's Office), DIAN and the Fiscalía General de la Nación (Attorney General's Office), Procuraduría General de la Nación (Procurator General's Office) would have access to the RUB, promoting information sharing and strengthening the fight against financial crimes (Art. 21), as reported by Global Financial Integrity.

The bill has been assigned to the First Commission of the Senate, but is still pending debate by the Commission.