[arin-ppml] Beneficial Owners

Fri Jul 13 13:24:57 EDT 2018

There is certainly opportunity for abuse of the current system, but
consider the case for companies not wanting to disclose "beneficial owners"
for good cause.

Startup companies may not want to reveal their investors who could be
taking a bet on new Internet technologies and services to get a head start
on their competitors.

Legitimate companies may create shell companies for the same purpose in
cases where internal teams are doing the R&D on new products and services
yet to be announced. Using an IP block allocated to a parent would be a
dead giveaway.

Similarly investors in small companies, such as individuals or families,
who don’t want to draw attention to their wealth for personal security
reasons may not want this disclosure. There is heightened awareness of this
in some ARIN member countries and territories.

Private investors also often invest in competing or related firms to hedge
on ideas that prevail. Disclosures could be challenging here too.

These are very real economic consequences. It is more than just a
bureaucratic tax for members to bear. There are other issues to review
within the ARIN region when considering the extra-regional implications.

It's not my area of specialty, but I'd think that international corporate
law forensics and financial transparency are governed by the policies (like
OFAC) of member states’ and territories’ governments and their agencies.
ARIN seems to respect these and rightfully errs on the side of caution when
in doubt. Then there is the question of addressing how each jurisdiction
defines "beneficial owners".

It is a genuine concern, but the case to preemptively expand the mandate to
disclose "beneficial owners" could be counterproductive to the membership.

Peter

On Fri, Jul 13, 2018 at 8:42 AM, Mike Burns <mike at iptrading.com> wrote:

> HI Albert,
>
> I am not clearly understanding the issues you are raising.
>
> If it is an issue of spinning up LLCs to loot the 4.10 and 4.4 pools,
> because you believe people will acquire those addresses by falsely claiming
> they will be utilized for transition, then that is a simple matter for ARIN
> to determine at the point of allocation.  If you are worried that people
> will fake that to get the addresses and then use them for purposes other
> than transition, it's not a big deal. 4.10 in particular is limited to a
> /24
> and 4.4 requires demonstration that the recipient is an exchange point.
>
> If it is an issue of foreigners acquiring ARIN space who might be covered
> under some sanctions regime, John Curran has mentioned they check the OFAC
> list and wouldn't engage with an entity under sanctions.  Remember there is
> a far simpler work-around for those people. Buy RIPE addresses and register
> them in RIPE.
>
> As far as your contention that businesses require both IPv4 and IPv6,
> that's
> belied by my experience. Many new ARIN members are signing up just to
> receive IPv4 transfers. In many cases these are enterprises who would
> normally have received IPv4 from their upstreams, who can no longer provide
> them. So they create an ARIN ORG-ID and receive IPv4 via transfer.
>
> IPv4 may be getting a little scarcer, but surely that would be reflected in
> the price. And while prices are rising, they are doing so at a pretty
> regular rate which does not indicate severe supply issues.  I will say
> there
> are supply issues at the large block sizes, but I don't think those buyers
> are likely to engage in the shenanigans you fear, as they are large
> corporations by default, willing to pay close to $20 million for a /12.
>
> What do you mean by "corporations controlled by others to get around the
> limits." What limits? The limit on address space used in the ARIN region?
> That is not much of a functional limit, as buyers can utilize RIPE space
> anywhere, and not even have to justify their need in the purchase. Plus
> they
> only need to use a /22 here anyway.
>
> If "nefarious" corporations want to get around limits, they just open a
> RIPE
> account and buy whatever they want, and use their addresses wherever they
> want. Why would they bother with ARIN when RIPE offers a free /22 to every
> new LIR, no questions asked?
>
> As far as your belief that ARIN failing to poke more deeply into its
> member's businesses would create more legal risk, I think the poking around
> would create more risk, as it would motivate those denied by ARIN due to
> the
> increased scrutiny to use legal recourse against ARIN's more nuanced
> decisions.  At the very least it would add to ARIN's expenses, and as a
> paying member I would like to understand what risks and downsides  you find
> in current policy/procedures that would be worth the additional expense?
>
> Regards,
> Mike
>
>
>
>
>
> -----Original Message-----
> From: ARIN-PPML [mailto:arin-ppml-bounces at arin.net] On Behalf Of
> hostmaster at uneedus.com
> Sent: Friday, July 13, 2018 11:01 AM
> To: 'ARIN-PPML List' <arin-ppml at arin.net>
> Subject: Re: [arin-ppml] Beneficial Owners
>
> They would not have to "sell" the space, but simply sell the company, whose
> assets include nothing but the space.  In the case of LLC's, a common
> manager for multiple LLC's with space might be driving the train, and no
> "sale" occurs, but the common manager still manages to control multiple
> /22's anyway if ARIN does not watch out for common managers.
>
> Anyone today starting a new business that does NOT use IPv6 space along
> with
> their IPv4 space is not doing things right.  As long as they took their
> assignment of both, and put both on the net, I think ARIN would be hard
> pressed to claim they are not using it for proper purpose.
>
> Does ARIN actually check the assignments that it makes for use.  How about
> corporations controled by others to get around the limits.  As things get
> more scarce in the IPv4 world, I suspect problems will get greater.
>
> Albert Erdmann
> Network Administrator
> Paradise On Line Inc.
>
> On Fri, 13 Jul 2018, Mike Burns wrote:
>
> > Dear Albert,
> >
> > You can't sell transition space per the 8.3 and 8.4 transfer policies.
> > You could merge them with an 8.2 or series of 8.2 transfers.
> > What ARIN needs to be sure is that those who ask for 4.10 and 4.4 are
> > actually utilizing the addresses for that purpose. That's it.
> >
> > ARIN was smart in my opinion to avoid creating a pool just for new
> > registrants, as other registries have done to their chagrin, as just
> > what you mention below happens. Especially in RIPE, new LIRs are spun
> > up to receive the /22 available to them, draining that reserve pool
> > more quickly than it should, and rewarding the gaming of policy.
> >
> > Regards,
> > Mike
> >
> >
> > -----Original Message-----
> > From: ARIN-PPML [mailto:arin-ppml-bounces at arin.net] On Behalf Of
> > hostmaster at uneedus.com
> > Sent: Thursday, July 12, 2018 8:50 PM
> > To: ARIN-PPML List <arin-ppml at arin.net>
> > Subject: Re: [arin-ppml] Beneficial Owners
> >
> > While I do not doubt that there might be shell entities that are
> > holding numbering resources for less than honorable purposes, I was
> > actually more worried about people forming special purpose LLCs or
> > Corps in order to hold numbering resources for the purpose of later
> > sale to others.  By forming a entity whose only asset is number
> > resources, this would be an easy way to "sell" the numbers obtained
> > without the M&A checks and balances, by simply selling the entire
> > entity to another, or the central controlling entity might simply use all
> the numbers itself.
> >
> > While this might have been done earlier before the IPv4 pot ran out,
> > at that time the value of addresses might not have been high enough at
> > that time to justify the incorporation expenses.  Currently the only
> > block of addresses that this idea could be directed at today is the block
> for IPv6 expansion.
> >
> > I suggest that ARIN be watchful of possible activity in this regard.
> > For example, a company that wants more numbers than ARIN policy would
> > allow might go out and form a series of LLC's that they directly
> > manage, each applying for a /22 of IPv6 Transition space.  Doing this
> > might be cheaper than going out into the market, and as things get
> > tighter in the IPv4 marketplace, this might become tempting for someone.
> >
> > As for ITAR regulations and the like, while encryption was once
> > considered in this realm, I do not think that ip addresses would be
> > subject to ITAR, so I doubt there is any real risk to ARIN.
> >
> > Albert Erdmann
> > Network Administrator
> > Paradise On Line Inc.
> >
> > On Thu, 12 Jul 2018, Ronald F. Guilmette wrote:
> >
> >>
> >> In message <69E64F3C-C9F7-4636-9350-C74DE11A0D36 at arin.net>,
> >> John Curran <jcurran at arin.net> wrote:
> >>
> >>> ARIN actually does quite a bit to insure that we're aware of the
> >>> parties we're dealing with, and that includes verification of the
> >>> legal
> > entities
> >>> involved and their pertinent bona fides.   ARIN reviews transactions
> for
> >>> potential conflict with applicable law, and has in the past declined
> >>> to process transactions that are unclear in that regard and referred
> >>> parties to US Treasury/OFAC to obtain appropriate clarity or
> >>> licensing as appropriate.
> >>
> >> Thank you John.
> >>
> >> I am aware, and was aware, that ARIN does indeed require
> >> documentation of the valid registration of, and legal existance of
> >> non-person legal entities to which it assigns number resources.  That
> >> is quite certainly a good thing, and a proper thing, and I think that
> >> ARIN is doing an admirable job of performing that level of vetting.
> >> But I think you must agree that this does not really address the
> >> issue I've
> > raised.
> >>
> >> In the case of non-person non-publically-traded legal entities, some
> >> of which may perhaps qualify as what might be called "shell
> >> companies", what documentation, if any, do current ARIN procedures
> >> require with respect to the identities of actual beneficial owners?
> >>
> >> If the answer is "none", then you should be neither shy nor in the
> >> least embarassed to say that.  As I have been reminded, many times,
> >> by both you and others, ARIN does pretty much all and only what it is
> >> mandated to do by the community, and according to the clear edicts of
> >> the public policy manual.  If ARIN is not currently requesting
> >> documentation of the identities of the beneficial owners of shell
> >> companies, then it is because the community has neither requested nor
> >> instructed it to do so, and in that case you are to be commended for
> >> your characteristic restraint, and for your admirable and consistant
> > adherence to the limits of your mandate.
> >>
> >>
> >> Regards,
> >> rfg
> >> _______________________________________________
> >> ARIN-PPML
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