Definition
In March 2019, an Inter-American Development Bank (IADB) report defined beneficial owners as "always natural persons who ultimately own or control a legal entity or arrangement, such as a company, a trust, a foundation". According to the United States' Securities Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, has or shares voting or investment power. The terms 'ultimately owns or controls' and 'ultimate effective control' refer to situations in which ownership/control is exercised through a chain of ownership or by means of control other than direct control. The FATF recommendations are recognized as the global anti-money laundering (AML) and counter- terrorist financing (CFT) standard. According to the identity and address verification service Trulioo, the process of identifying ultimate beneficial owners (UBOs) includes acquiring and verifying a company's "accurate company "information regarding register number, company name, address, status, and key management personnel"; analyzing "ownership structure and percentages", "determining the "entities or natural-persons who have an ownership stake, either through direct ownership or through another party"; identifying beneficial owners: and calculating the "total ownership stake, or management control, of any natural-person and determine if it crosses the threshold for UBO reporting" and "perform AML/KYC checks for all individuals determined to be a UBO". AInternational standards
Determining beneficial ownership information is a requirement of the 4th AML Directive in Europe and different jurisdictions are passing enabling laws to enforce reporting requirements. In the US, similar beneficial ownership disclosures are a part of the FinCEN Customer Due Diligence Final Rule beginning May 2018. The Beneficial Ownership Data Standard (BODS) has been developed to serve as a conceptual and practical framework for collecting and publishing beneficial ownership data, and enabling the resulting data to be interoperable, more easily reused, and higher quality. A beneficial owner of a Company must be an individual at all times. BODS provides a specification for modelling and publishing information on the beneficial ownership and control of companies. It was created by OpenOwnership, and is provided under an open license for re-use. OpenOwnership is supporting the development of the standard; however, the standard retains its own independent governance through the working group of international experts.Financial Action Task Force on Money Laundering
The Financial Action Task Force on Money Laundering (FATF), an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering and terrorist financing, was established in 1989, and sets international standards related to beneficial ownership, including the definition of beneficial ownership, which it defines as the natural person(s) who ultimately owns or controls a legal entity and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. Since 2000, FATF has compiled and maintained a "OECD's "Ownership and Control of Ships"
According to the OECD's 2003 December report, entitled "Ownership and Control of Ships", corporate structures are often multi-layered, spread across numerous jurisdictions, and make the beneficial owner "almost impenetrable" to law enforcement officials and taxation. The OECD's Maritime Transport Committee Secretariat had initiated an investigation at its January 2003 meeting. The report concludes that "regardless of the reasons why the cloak of anonymity is made available, if it is provided it will also assist those who may wish to remain hidden because they engage in illegal or criminal activities, including terrorists." The OECD report concludes that the use of bearer shares is "perhaps the single most important (and perhaps the most widely used) mechanism" to protect the anonymity of a ship's beneficial owner.Major violations
According to a 23 February 2018 article in '' The Diplomat'', in the Ablyazov Affair, involving the ex-Kazakh minister Mukhtar Ablyazov, beneficial ownership was used to fraudulently move $6 billion fromBeneficial ownership by country
Azerbaijan
Azerbaijan has introduced the concept of beneficial ownership and filing requirements via amending the Law on the Registration of Legal Entities on 15 May 2025. Under the mentioned law, a Beneficial owner is defined as a natural person (or persons) who ultimately exercises control over a legal entity or a foreign legal entity, or who is the actual owner of a legal entity or foreign legal entity and/or on whose behalf transactions are carried out and/or contracts are concluded, and who ultimately exercises effective control over a legal entity or a foreign legal entity. The identification of their beneficial owners by legal entities that have passed state registration by May 15, 2025, as well as the beneficial owners of a foreign legal entity by a representative office and branch of a foreign legal entity and the submission of information and documents to the state register of legal entities in accordance with the Law of the Republic of Azerbaijan “On State Registration and State Register of Legal Entities” is ensured by the following stages: *for large business entities until December 31, 2025; *for medium-sized business entities until June 30, 2026; *for small business entities until December 31, 2026; *for micro-business entities until December 31, 2027; *for non-governmental organizations and religious institutions until June 30, 2026.Canada
The Canadian federal Department of Finance— Finance Canada (FC)—February 2018 discussion paper, "Reviewing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime", was prepared in preparation for the FC's legislative Parliamentary Review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), which is the federal legal framework for regulating AML/ATF. The February paper called for "stakeholders' views on how to improve the Canadian Anti-Money Laundering (AML) and Anti-Terrorist Financing regime. FC requested input on "corporate ownership transparency and mechanisms" that would "improve timely access to beneficial ownership information by authorities while maintaining the ease of doing business in Canada." The resulting November 2018 Standing Committee on Finance report, recommended the creation of a "pan-Canadian beneficial ownership registry for all legal persons and entities, including trusts, who have significant control which is defined as those having at least 25% of total share ownership or voting rights" that would "include details such as names, addresses, dates of birth and nationalities of individuals with significant control". While the registry "should not be publicly accessible", it could be "accessed by certain law enforcement authorities", theUnited Arab Emirates
After international pressure to practice financial transparency increased, the UAE government announced the introduction of the Ultimate Beneficial Ownership or UBO law. Under the law, the UBO holding 25% of the company's ownership and voting rights at the firm with the permission to appoint or dismiss directors is reported in case of violation of rules. Under the law, the UBO holding 25% of the company's ownership and voting rights at the firm with the permission to appoint or dismiss directors is reported in case of violation of rules. Since then the emirates' lack of a central register for all its financial activities and a weak regulation has, according to critics, made the Gulf nation turn into a safe haven for illicit financial activities. The UAE has been named in several investigative reports such as FinCEN Files and Luanda Leaks by ICIJ or the International Consortium of Investigative Journalists. However, advocates question the success of introducing the new rule of reporting a company's UBO, as they don't consider it to be enough a parameter to monitor and curb money laundering in the UAE. However, not complying with the law, enacted from 1 July 2021, could charge the responsible company with a penalty and a fine worth 100,000 UAE dirhams.United Kingdom
The United Kingdom defines a beneficial owner (known as a 'person with significant control') as someone who holds more than 25 per cent shares or voting rights in a company. There are several company registers of beneficial ownership. The persons with significant control (PSC) register contains the beneficial owners of UK companies and is held by Companies House. This register contains information about beneficial owners' full names, date of birth, nationality, country of birth, service address, residential address, the original date of beneficial ownership and the nature of control over the company. This is a free and open register. There is also a register of trusts, which is held by His Majesty's Revenue and Customs (HMRC) and is concerned only with trustees liable to pay UK tax. It does not feature overseas trusts and is not freely open. The UK is due to implement a register for overseas companies that own property in the UK. In the United Kingdom until the electoral reforms of the late 19th century, a common electoral abuse involved so-calledUnited States
The United States defines beneficial ownership as the individuals who directly or indirectly own or control a legal entity, such as a corporation or LLC, and who benefit from its assets or income. The Corporate Transparency Act (CTA), enacted in January 2021, introduced new requirements for filing a Beneficial Ownership Information Report (BOIR) to enhance transparency and combat financial crimes such as money laundering and terrorism financing. Under the CTA, certain corporations, LLCs, and similar entities are required to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This information includes the full legal name, date of birth, address, and unique identification number of each beneficial owner. The CTA aims to prevent the misuse of anonymous shell companies for illicit activities by providing law enforcement and regulatory agencies with access to accurate and up-to-date beneficial ownership information.See also
* Real party in interestNotes
References
{{Authority control Ownership Property law Securities (finance) Stock market