Prevention
Prevention involves actions, mechanisms and tools that reduce corruption risks, or increase the costs of corruption in ways that deter corrupt activity. Open data can be used in prevention across a range of sectors.
In the private sector
In the financial sector, governments have increasingly introduced Know Your Customer (KYC) regulations that require banks and other financial institutions to conduct due diligence checks what taking on a new client, or processing funds. Firms entering into new deals may also wish to carry out due diligence on potential business partners. These checks often involve:
Identifying the owners and beneficial owners of a company client;
Checking clients and their owners against a list of politically exposed persons or public officials;
Checking clients and their owners against court records;
At present, these checks are often carried out using ‘black box’ private due diligence services. These services are often expensive (banks may pay-per-search), and often rely on a limited range of sources, such as media coverage, to flag up potential client risks. If the media have not reported on a given corruption case in the past, the due diligence databases might have a blind spot.
As more information becomes available as open data, and if government and private firms demand better quality due diligence, then there is scope for innovation in how these processes take place. However, it is important to note that many regulations and businesses processes for due diligence rely on documentary evidence. An entry in a dataset may need to be backed up by other sources of evidence before a bank or financial institution will make a due diligence decision based on it.
Case study: Open Ownership
The OpenOwnership.org project is working to build a global database of beneficial ownership data, drawing on existing published data, and self-submitted information from companies and beneficial owners.Beneficial ownership refers to “the natural person or persons who ultimately owns or controls a customer and/or a natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.”Knowing the beneficial owner(s) of an asset is vital to be able to truly follow the money, and see through layers of shell companies and complex ownership structures. Some jurisdictions are now introducing registers of beneficial ownership, requiring companies and land registrations to provide details of their ultimate beneficial owners.By combining data from different national registers, using a common Beneficial Ownership Data Standard (currently under development) and allowing self-submission of data OpenOwnership it is aiming to provide a ready-to-use source of information for due diligence.The project is being developed as a multi-stakeholder partnership involving Transparency International, One, the Open Contracting Partnership, the World Wide Web Foundation, Global Witness and The B Team.
The Anti-Corruption Open Up Guide
In the public sector
When interest and asset disclosures are filed on paper, it can be easy for politicians and officials to leave out certain disclosures, and simply hope these will not be detected. But when disclosures are published as structured data, it becomes easier to cross-reference between the information provided in a disclosure, and the information held in other sources, such as the company register.
This increase the complexity and costs of hiding information, and creates a pressure for more accurate disclosures.
Case study: ProZorro
The Anti-Corruption Open Up Guide
Case study: 3 x 3
Proactive publication of structured data about interests and assets is relatively rare. More often, declarations are made on paper forms, or hosted on scattered websites of each institution. To respond to this challenge in Mexico, Transparecia Mexicana and partners launched the ‘3 of 3’ campaign calling on politicians and public officials to publish three key declarations using structured templates and covering their: Statement of assets; Interest declarations; and Tax returns.
At the moment, officials need to provide this information directly to the 3 of 3 campaign, who then re-publish it in semi-structured forms. However, the information is captured using Excel templates, offering opportunities for further analysis and cross-linking of declarations.
The Anti-Corruption Open Up Guide
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