The True Purpose of Beneficial Ownership Registers: A Tool for Taxation and Wealth Confiscation?
Introduction
In recent years, Registers of Beneficial Owners (RBOs) have been globally implemented amid claims that they aim to curb money laundering, terrorism financing, and the flow of illicit funds. However, critics argue that their true purpose lies elsewhere—tracking, taxing, and potentially confiscating wealth. Expats, entrepreneurs, and high-net-worth individuals in particular need to understand the implications of these measures and how they impact financial freedom and privacy.
They are useless in combating criminal activity and they have sinister implications for wealth confiscation and taxation. Here, we’ll break down what RBOs are, how they function, and why individuals seeking alternative citizenships or residencies should be concerned.
—
What Are Registers of Beneficial Owners (RBOs)?
RBOs are regulatory tools that require companies, trusts, and other incorporated entities to disclose any natural person who owns a 25% or greater share of the entity or exerts substantial control. Depending on the jurisdiction, such registers may be publicly accessible or restricted to government agencies and specific stakeholders.
Rationale for Their Introduction
Governments and international organizations claim RBOs are vital for increasing transparency and cracking down on illicit financial activities. They argue that without these registers, money-laundering kingpins and terror financiers could freely operate under the radar. Indeed, the concept of RBOs was marketed as a public good, promising to rein in bad actors while upholding financial integrity.
The Reality of RBOs
Critics argue that criminal actors—those purportedly targeted by RBOs—are unlikely to self-identify or register their illicit funds. Instead, such individuals exploit loopholes or employ intermediaries, often referred to as “strawmen,” to mask their involvement. This renders RBOs largely ineffective in addressing their claimed objectives. Consequently, the primary impact falls on law-abiding business owners and individuals whose wealth and ownership details are now exposed to potential scrutiny, misuse, and taxation.
—
RBOs and the Rise of Wealth Taxation
The timeline of RBO implementation aligns suspiciously with discussions around wealth taxes. Wealth taxes had largely fallen out of favor because of the difficulty in assessing and tracking assets. However, with global RBOs now in place, governments have clear visibility into who owns what—and where.
Renewed Focus on Wealth Taxes
By 2020, many governments, including those in nations that previously dismissed wealth taxes, began reconsidering their reintroduction. Similarly, organizations such as the OECD and UN are advocating for wealth taxes, particularly on billionaires, as a solution to growing concerns over wealth inequality. Critics argue that while the stated intention is to tax the rich and redistribute wealth, the larger motive is to empower governments financially at the expense of individual autonomy.
Potential Risks of Visibility to Governments
A key concern for individuals is what governments might do with this unprecedented level of asset transparency. History offers cautionary tales, such as regimes targeting specific groups or outright asset confiscations under pretexts like political dissidence or national emergencies. In an era of populist policies and mounting public debt, some argue that confiscatory practices could see a resurgence as governments seek new revenue streams.
—
What Expats and High-Net-Worth Individuals Should Know
For expats and globally mobile individuals, the implementation of RBOs pose unique risks, especially for those living under oppressive or unstable regimes. The ability of governments to track and tax wealth has never been this comprehensive, thanks to international cooperation and technological advancements.
Where Financial Freedom Still Exists
Financial freedom has increasingly shifted away from Western democracies, traditionally considered bastions of personal liberty, to jurisdictions like the UAE and Singapore. These countries offer tax-advantaged living with fewer restrictions on wealth and asset structuring.
Legal Strategies for Financial Privacy
To safeguard their financial well-being, individuals are turning to legal structures such as trusts and foundations that, depending on jurisdiction, can shield beneficial ownership information from public RBO scrutiny. Proper structuring advised by experienced professionals remains essential.
Additionally, diversifying residency or citizenship through investment migration programs can also provide legal pathways to protect one’s assets. Choosing jurisdictions with favorable regulations ensures both financial privacy and personal safety.
—
The Future of Global Taxation
As the regulatory environment tightens, wealth holders must proactively prepare for a world where financial privacy is significantly curtailed. RBOs are just one of many measures governments are leveraging to gain control over assets. Coupled with penalties for non-compliance—in some cases amounting to hundreds of dollars per day—governments have constructed a system that incentivizes total disclosure while punishing those who resist.