Understanding who ultimately has control of your customer plays an important role in detecting, disrupting and preventing money laundering and terrorism financing. It can also protect your business or organisation from being exploited for other forms of criminal activity. All reporting entities must identify the beneficial owners of their customers and assess the money laundering/terrorism financing risk they pose.
A beneficial owner is an individual who ultimately owns or controls an entity such as a company, trust or partnership.
- ‘Owns’ in this case means owning 25% or more of the entity. This can be directly (such as through shareholdings) or indirectly (such as through another company’s ownership or through a bank or broker).
- ‘Controls’ in this case means having the power to make decisions about the entity’s finances and operations. They may exert control through trusts, agreements, arrangements, understandings, policies or practices.
Note that a customer may have more than one beneficial owner.
Your obligations around beneficial owners include:
- determining who your customers’ beneficial owners are
- assessing the level of money laundering/terrorism financing risk your customers’ beneficial owners pose to your business or organisation
- verifying the identity of your customers’ beneficial owners
- keeping records of how you identified each beneficial owner and verified their identity.
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