Reducing corruption in the extractive sectors is now a high priority of the global development agenda because of the degree to which such corruption can impede economic development and contribute to illicit financial flows (IFFs). This kind of corruption can prove complicated and intractable to eliminate because mitigating corruption in natural resource and extractive sectors requires enhancing transparency and improving the quality and effectiveness of regula tory governance in order to eliminate the loopholes which corrupt officials can easily exploit in ways that are very difficult to detect. According to Al-Kasim, Søreide, and Williams (2008, 8), “Many countries have experienced firsthand how easily a few benefits to a few decision-makers can undermine an entire industry and impede welfare improvements to a whole population. This is, nev ertheless, what corruption is often about: relatively small benefits in the per sonal world of civil servants and politicians that are sufficient to alter the decisions they make as representatives of the state.” We hope this manual contributes to identifying good practice options for reducing corruption risks in the extractive sectors. Although there are many points in the extractive value chain where corruption can emerge, licensing deci sions are among the most critical. Thus, this manual focuses on the licensing process because few countries benefit when unsavory persons are granted licenses to operate in the extractive sectors or negotiate concession contracts. It tailors the “fit and proper” concept, globally recognized for decades as a key Basel Core Principle for Effective Banking Supervision (Basel Committee on Banking Supervision 2012) to extractive sector licensing in order to improve the integrity and quality of market entrants. This concept, known among financial supervisors as Basel Core Principle 5 on fit and proper licensing,1 has been long regarded as critical to responsible financial supervision because of the sector’s elemental role in the economic health and financial stability of national econo mies. The “fit and proper” principle simply requires thorough and systematic back ground checks of license applicants, including documenting the identity of ben eficial owners to reduce the probability that criminals or those likely to engage in abusive or unethical activities can acquire a license or controlling interest in a licensed entity. In countries where the extractive sectors are critical to economic x | LICENSE TO DRILL development, assessment of the fitness and propriety of license applicants and identification of beneficial owners can be a useful tool for improving the integ rity and regulatory governance of these sectors. The importance of identifying and documenting the beneficial ownership of those operating in the extractive sectors has also been recognized by the Extractives Industries Transparency Initiative (EITI). This EITI Requirement 2 (adopted in 2016; see box I.2 in the introduction) obligates countries to publicly disclose the identity of beneficial owners (EITI 2016). Operationally, disclosing the identity of beneficial owners requires first identifying them and then verify ing their identity, which is best done before licenses are granted. It must be recognized, however, that effective assessment of the fitness and propriety of license applicants and technical compliance with the EITI Require ments will not eliminate extractive sector corruption if other important safe guards to ensure accountability and transparency are ineffective. When officials are not (or cannot be) held effectively accountable for licensing decisions, cor ruption risks are likely to be high, with benefits rewarding those more interested in personal enrichment at the expense of the national interest than developing extractive sectors. Although effective implementation of international standards and good practices can help to enhance transparency, civil society must play an important role in holding officials to account for licensing decisions that involve important national assets. As has often been said, the most important political office is that of the private citizen. A lot of work remains to be done. We hope this manual will be useful for offi cials and experts seeking to improve the quality and transparency of regulatory governance of the extractive sectors, and we welcome the contributions of all to advancing global and local knowledge in this important field.