Beneficial ownership

Beneficial ownership is a term in domestic and international commercial law that refers to anyone who enjoys the benefits of ownership of a security or property, without being on the record as being the owner. Webster's defines a beneficial owner as 'one who enjoys the benefit of a property of which another is the legal owner.' The legal owner (i.e. the owner on the record) may be described as the 'registered owner', and if they are not the beneficial owner they may be described as a 'nominee'. Beneficial ownership is a term in domestic and international commercial law that refers to anyone who enjoys the benefits of ownership of a security or property, without being on the record as being the owner. Webster's defines a beneficial owner as 'one who enjoys the benefit of a property of which another is the legal owner.' The legal owner (i.e. the owner on the record) may be described as the 'registered owner', and if they are not the beneficial owner they may be described as a 'nominee'. In United States securities law, a beneficial owner of a security includes any person who, directly or indirectly, has or shares voting or investment power. According to 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, the term 'beneficial owner' refers to 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. 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 recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard. Beneficial ownership was used to fraudulently move $6 billion from Kazakhstan's BTA Bank in what is the largest case of financial fraud in history. 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 effective from May 11, 2018.