The True Purpose of Beneficial Owner Registers

Jimmy Sexton
Dubai

Let’s be clear: The true purpose behind Registers of Beneficial Owners (RBOs) has nothing to do with stopping money laundering, the financing of terrorism, or the flow of illicit funds.

Wealthy Western countries have forced them upon the world for one purpose: To tax and confiscate wealth.

It’s no coincidence that governments worldwide began floating wealth taxes shortly after RBOs emerged.

Companies widely implemented RBOs in 2017; by the end of 2020, most of the world had them in place.

In case you are unfamiliar with RBOs, they require companies and other incorporated entities to report any natural person with a 25% or greater ownership interest.

If no such person exists, then the persons or persons with substantial control of the entity—think officers and directors, for example—must report. Some RBOs allow public access, while others restrict access to governments and those with a legitimate interest.

Governments sold RBOs to the public as a necessary measure to stop criminals and the flow of illicit funds.

Unfortunately, most of the public doesn’t own a company, so RBOs don’t affect them, and they don’t care. They may think that RBOs are a good idea because they are ignorant about their impact. Either way, RBOs are here and here to stay.

RBOs have zero chance of stopping the flow of illicit funds. Do you think El Chapo or some other criminal overlord will report themselves in an RBO? Of course not!

They will use a strawman or employ other tactics to avoid detection as they always have. This leaves legitimate people and strawmen reporting in RBOs. What value does this give governments other than tracking wealth?

I recall in 2018, I sat on a panel at a tax conference with the CEO of the Tax Justice Network (TJN).

He felt so proud that when the UK’s RBO came online, the TJN identified 1,200 possible cases of criminal activity.

Out of 2.5 million companies, they identified 1,200 possible cases of criminal activity; that’s 0.00048% of companies, to be clear.

As I said before, stopping criminal activity was never the point of RBOs. They exist to tax and confiscate wealth, and you can’t tax what you don’t know exists.

This is the main reason most countries abandoned wealth taxes long ago; administrators found it too hard to manage, but not with RBOs.

Through RBOs, the government knows who owns what and where. No wonder that in 2020, many countries started floating the idea, including those that had previously scrapped it.  

Now, even the OECD and UN support some type of wealth or billionaire tax.

Wealth taxes didn’t work before because governments didn’t know what their people owned; now they do.

They now know what to tax and confiscate. Just imagine if the Nazis, Communists, or ill-intentioned dictators had access to this information.

Such risks continue today; imagine you live somewhere under an oppressive regime, and now your assets fall within such regime’s purview. Not only could your regime endanger your wealth, but your life.

Most governments long ago stopped looking out for their people’s best interests and started looking out for the best interests of the government, which means more taxes.

You now have far more financial freedom in non-democratic countries, like the UAE and Singapore, than you do in so-called democracies.

Most democracies today essentially try to back into a form of Marxism through taxation—they want to tax everyone into equality, but the lion’s share of wealth winds up with the government.

They’re pushing for higher taxes on the rich, wealth taxes, and I have even seen proposals capping wealth at US$10M.

This is not what the world needs. Economies thrive under capitalism and die under communism. This should be clear by now, but unfortunately, the masses feel attracted to more government handouts.

Make no mistake, wealth taxes and confiscation are coming. Governments will not stop at direct taxation; they will confiscate wealth through indirect taxation (confiscation), such as penalties.

In the US, for example, if you fail to update your beneficial owner information in the Beneficial Owner Information Register on time, the penalty is US$500 per day.

Other countries have similar ridiculously high penalties, and they will get worse.

The Americans, for the time being, have dodged a bullet by electing Donald Trump.

There will be no tax on the rich and wealth taxes under his leadership. The outlook appears grimmer in other parts of the world.

So, how do you protect yourself and your wealth? The answer is that you must move somewhere where wealth is welcome and offers tax-advantaged living.

You must also put your wealth in a properly structured trust or foundation, which can legally keep your identity out of RBOs.