🔹 Definition
A Beneficial Owner is the natural person who ultimately owns or controls a legal entity, such as a company, trust, or partnership—even if the ownership or control is exercised indirectly through other entities or arrangements. In the context of AML/CFT compliance, identifying the beneficial owner is critical to prevent the misuse of corporate structures for illicit activities like money laundering, tax evasion, or terrorist financing.
Most regulatory frameworks require businesses to identify and verify the beneficial owners of their customers as part of Customer Due Diligence (CDD) or Know Your Business (KYB) obligations. A typical threshold for beneficial ownership is 25% or more of equity interest or voting rights, but this may vary by jurisdiction or risk level.
🔹 Frequently Asked Questions (FAQs)
Q1: How is a beneficial owner different from a legal owner?
The legal owner is the person or entity whose name appears in the official ownership documents. The beneficial owner is the person who actually benefits from or controls the entity—even if they are not listed publicly.
Q2: Why is identifying the beneficial owner important in AML compliance?
Because criminals often use layers of ownership (e.g., shell companies or nominee directors) to obscure their identity. Identifying the true beneficial owner helps financial institutions and regulators understand who ultimately controls the entity and assess the risk involved.
Q3: How do you identify a beneficial owner?
Through a combination of:
- Corporate documents (e.g., share registry, company constitution)
- Ownership structure charts
- Questionnaires or declarations from the client
- Independent verification (e.g., registry searches or public databases)
Q4: Are beneficial ownership details always publicly available?
Not always. Some jurisdictions require public registers (e.g., EU), while others restrict access to authorities or regulated entities. However, companies subject to AML regulations must obtain and keep records of this information.
