Ending Corporate Anonymity: Beneficial Ownership, Sanctions Evasion, and What the United Nations Should Do About It

Abstract

In the vast majority of jurisdictions around the world, there is a generous array of corporate forms available to persons and companies looking to do business. These entities come with varying degrees of regulation regarding how much information about the businesses’ principal owners must be disclosed at the time of registration and how much of that information is subsequently available to the public. There is little policy harmonization around the world on this matter. Dictators and despots have long taken advantage of this unintended identity shield to evade sanctions which target them; in July of 2019, the Center for Advanced Defense Studies (C4ADS) published a comprehensive, investigative report into North Korea’s supply chain for luxury vehicles outlawed by U.N.S.C resolution 1718. C4ADS found eighty-two previously unreported shipments of 803 luxury vehicles – including two armored Mercedes limousines Kim Jong-Un was later pictured in – between 2015 and 2017 alone. At least twenty-four corporate entities, mostly based in China and Russia, participated in the process of covertly moving the cars to North Korea as guarantors, consignors, or consignees. Hugh Griffiths, Senior Researcher and Head of Countering Illicit Trafficking-Mechanism Assessment Program at the Stockholm International Peace Research Institute and coordinator for the U.N. panel convened to monitor North Korean sanctions compliance, summed up the significance of the problem succinctly. “If you can smuggle luxury limos into North Korea, which is done by shipping container,” he says, “that means you can smuggle in smaller components – dual-use items for ballistic and nuclear programs.” Deficient beneficial ownership protections around the world are not just the esoteric consequence of complicated legal systems; they present a significant threat to international peace and security as a vehicle for terrorism financing, sanctions evasion, and other forms of criminal activity. In six parts, this paper considers the development of beneficial ownership regulation since the 1990s, describes current efforts to harmonize jurisdiction-specific approaches, suggests more intensive involvement by the United Nations, establishes the legal basis for the use of the U.N. Security Council’s legislative powers on this issue, and argues that the United Nations is the international organization best-suited to drive towards universal, international compliance with the modern regulatory consensus.