The Definitive Guide To Beneficial Ownership
White paperThe definitiveguide tobeneficialownershipIdeal for those who are new to thetopic, or looking for a refresher course,this guide covers everything from whatbeneficial ownership is to the technologyavailable to keep up with constantownership changebvdinfo.com1
Table of contents3Introduction: the whats, whys and hows of beneficialownership5Recognised definitions of beneficial ownership andwhat to do with it7How beneficial ownership information is used incompliance research and the basics on where to find it9An increased worldwide focus on beneficial ownershiptransparency: drivers and the changes they bring15Technology and data to identify and validate acompany’s beneficial owners19Dealing with the constant churn of beneficialownership change22Conclusion: what this all means for your business24Bureau van Dijk and its compliance solutionsbvdinfo.com2
Introduction:the whats, whysand hows ofbeneficial ownershipbvdinfo.com3
The compliance landscape is changing.As technology improves, and regulations becometighter and more nuanced, we find ourselves leavingan era of box-checking to enter an age of rigorous,meaningful, data-driven due diligence.And, though they’re leading the way, it’s not justthe regulated industries that are acting. Societalpressures, consumer expectations and anincreasing sense that it’s the right thing to do areleading to a rise in the amount and complexity ofcompliance work that non-regulated corporationsare choosing to undertake.This applies to few areas of compliance more thanbeneficial ownership.To future-proof your third-party relationships andprotect your reputation, not to mention comply withthe relevant laws and regulations, you need to stayon top of who your clients’, suppliers’ and businesspartners’ beneficial owners are if you have any sortof ongoing relationship with them. But what do we mean by “beneficialRegulatory and technological developments haverocketed in recent years, so the paper also servesas a refresher course.We cover: What beneficial ownership is and the areas ofcompliance it applies to; Recent regulatory developments and other driversthat have brought it into the spotlight, such asFinCEN’s CDD Final Rule and the EU’s fourthanti-money laundering directive; and The technology and methods you can use toexplore beneficial ownership and keep up withconstant ownership change.We finish with a summary of the results of thepolling questions we asked a large, diversesample group at a recent webinar on beneficialownership, which indicate how seriouslycompliance professionals are treating the issue ofbeneficial ownership.ownership”? Why is it so important? And how do we build the processes to keeptrack of it?This guide answers these questions for an audienceof practitioners working in the worlds of anti-moneylaundering (AML), know your customer (KYC)compliance and enhanced due diligence (EDD).bvdinfo.com4
Recogniseddefinitions ofbeneficial ownershipbvdinfo.com5
For those vetting the third-party companies they deal with,identification and monitoring are two of the major challenges ofbeneficial ownership.But before tackling those issues, let’s establishwhat we mean by the term and outline some ofits applications.“Each individual, if any, who, directly or indirectly,No beginner’s guide would be complete without asummary of the definitions given by some of theleading bodies involved in regulating AML, KYC,EDD and similar areas of concern.“A single individual with significant responsibility toLet’s start with the Financial Action Task Force(FATF). Often viewed as the top trendsetter, notjust in financial crime but in compliance moregenerally, FATF’s influence stretches beyond thelimits of banks, financial institutions and the moreregulated industries.In a glossary on its website, it says that beneficialowner refers to:“ the natural person(s) who ultimately owns orcontrols a customer and/or the natural person onwhose behalf a transaction is being conducted. Italso includes those persons who exercise ultimateeffective control over a legal person or arrangement.“Reference to ‘ultimately owns or controls’ and‘ultimate effective control’ refer to situations in whichownership/control is exercised through a chainof ownership or by means of control other thandirect control.”That second paragraph is crucial, as we shall see inlater sections.Another key player is FinCEN, or the FinancialCrimes Enforcement Network, an agency of theUS Treasury. In its recent and wide-reaching CDDFinal Rule, which we’ll touch on in a later section, itdefines a beneficial owner as each of the following:bvdinfo.comowns 25% or more of the equity interests of a legalentity customer (i.e., the ownership prong); andcontrol, manage, or direct a legal entity customer,including an executive officer or senior manager(e.g., a Chief Executive Officer, Chief Financial Officer,Chief Operating Officer, Managing Member, GeneralPartner, President, Vice President, or Treasurer); orany other individual who regularly performs similarfunctions (i.e., the control prong). This list of positionsis illustrative, not exclusive, as there is significantdiversity in how legal entities are structured.”So, FinCEN’s position is conceptually in line withFATF but introduces specific percentage thresholds.Figures have also featured in the European Union’sdefinitions for several years. Its fourth anti-moneylaundering directive – which, according to a UKgovernment consultation, aimed to address theupdated FATF standards – talks in similar termsand, in the case of corporate entities, references thecrucial cut-off “shareholding of 25% plus one share”(see Article 3, section 6).As part of the “increased focus” section, we covermore on the intricacies of the Directive, whichcame into effect across the EU in June 2017. Butthe main points here are that: regardless of yourjurisdiction, beneficial ownership definitions arebroadly aligned; and, given the globalised natureof trade, there’s overlap in which regulationscompanies should adhere to or be influenced by inrelation to beneficial ownership.6
How beneficialownership informationis used in complianceresearch and thebasics on whereto find itbvdinfo.com7
Regulated industries – banks, financial institutions, professionalservice firms and the like – have no choice but to adhere to beneficialownership regulations. The fines and other consequences fornoncompliance are high.For other industries, the compliance landscape istheoretically simpler, and they’re bound only by thegeneral corporate laws that apply to all companiesand employees. But a growing number ofcompanies are choosing to operate tighter regimesto help protect their reputation – something that cando usually reveal the owner’s identity, which is anecessary step in the research process. If not, theycan lead to a shell company, which can provide auseful prompt for further investigation. Complexand/or off-shore ownership structures can alsoprovide useful prompts for further investigation ifbe seriously damaged by dealing with third-partycompanies with questionable beneficial owners.they appear designed to obfuscate transparency.And that’s the essence of beneficial ownershipcompliance: not only must you avoid working with“bad” people and companies, you must avoidworking with companies that have bad beneficialowners, whether that ownership is direct or indirect.It’s a conceptually simple notion but in practice canbe very difficult to determine and monitor. And whatdo we mean by “bad”?It can mean many things. Beneficial owners canappear on watchlists. They can be involved inanti-money laundering. They might be implicatedin bribery and corruption, modern slavery, drugstrafficking, terrorist financing the list goes on. Andit’s covered by companies’ general policies on AML,KYC, due diligence and EDD, as well as the relevantlaws and regulations.So, put simply: be careful!Access to the right company information, such asthat available on Bureau van Dijk’s Orbis databaseof 275 million private companies around the world,is crucial when researching beneficial ownership.While such databases don’t in most cases revealwhether a beneficial owner is problematic, theybvdinfo.comIn relation to a specific and overlapping area ofcompliance, if that person is on a sanctions list, thatfact can be identified on Compliance Catalyst, aworkflow tool used in conjunction with Orbis, whichgives access to the WorldCompliance database ofPEPs and sanctions information.Sometimes targeted, economic sanctions areissued by a number of bodies, including the Officeof Foreign Asset Controls (OFAC) in the US or bythe EU and its member states’ governments, andthey apply to everyone, not just regulated industries.Sanctions can be imposed on entities, and thesearen’t directly relevant to beneficial ownership, oron individuals, which are. They also apply a lessnuanced definition of control, for most sectors 50%.But, as this can cascade down through multiplelayers of ownership, similar investigative processescan be used, and we’ll touch on these later.As much as anything, beneficial ownership is aboutestablishing context to your investigations, asdiscussed in an extended guest blog post by KeithFurst of Data Derivatives.And its reach is expanding. As we’re aboutto discuss.8
An increasedworldwide focus onbeneficial ownershiptransparency:drivers and thechanges they bringbvdinfo.com9
Interest in beneficial ownership is on the rise, a point proven by aquick analysis using the Google Trend tool.By reviewing “beneficial ownership” as a search term during the five-year period from September 2012to September 2017, we can see its popularity grow from around 30% to a peak in April 2016, when therevelations from the leaked Panama Papers first hit the headlines. But, after an initial and expected dip, theupward trend continues beyond that point.Percentage of current peak,set at 100%Worldwide interest over time in the search term “beneficial ownership”100806040200October 2012April 2016October 2017Data source: Google Trends (www.google.com/trends)Why is this?For some time, corruption has been viewed asa worldwide epidemic, one that threatens oureconomy and culture.In the foreword to a collection of essays oncorruption, then British Prime Minister, DavidCameron, wrote:“Corruption is the cancer at the heart of so manyof our problems in the world today. It destroys jobsand holds back growth, costing the world economybillions of pounds every year. It traps the poorest inthe most desperate poverty as corrupt governmentsaround the world syphon off funds and preventhard-working people from getting the revenues andbvdinfo.combenefits of growth that are rightfully theirs. It stealsvital resources from our schools and hospitals ascorrupt individuals and companies evade the taxesthey owe. It can even undermine our security, asSarah Chayes argues in her essay, if the perceivedcorruption of local governments makes people moresusceptible to the poisonous ideology of extremists.”Not everyone shares Cameron’s general politicaloutlook, but few would disagree with thesesentiments. And the UK Bribery Act 2010 – enactedunder the previous administration he led and withcross-party support – helped popularise a rangeof efforts around the world to combat all formsof corruption, many of them inextricably linked tobeneficial ownership.10
Related legislation followed, such as the ModernSlavery Act 2015, much of it leading back tobeneficial ownership. And regulations aroundthe world – particularly in the US and EU – haveevolved, with the activities they apply to comingunder increased scrutiny.Recent violationsThese drivers should be viewed alongside recentviolations. High-profile examples include theNetherlands-based telecoms company VimpelCom(now VEON), which acquired two cellularcompanies in Uzbekistan in 2015.According to former federal prosecutor and FCPAexpert Michael Volkov, speaking as a panellist onone of Bureau van Dijk’s webinars in 2016, “bothof the target companies had shell companies in theownership structure. In other words, the ultimaterecipient of the money that was being paid [for theacquisition] was a shell company, and that wasknown by not only the lawyers, it was known bythe board, it was known by senior management.Now, senior management tried to push this throughwithout disclosing certain basic information.”shell companies. They should have, and had theydone so, their research would have led them toGulnara Karimova, daughter of the Uzbek president.In 2016 the US Department of Justice and Dutchregulators fined the company nearly 800 million forFCPA violations.Another prominent case relates to a drillingcompany operating in Angola and the ownership ofits joint venture business partner. The company’sdue diligence was insufficient. But the authoritiesdetermined that the business partner was 10%owned by Manuel Vicente, head of the state-ownedAngolan oil company Sonangol.“Obviously this was a bribery problem,” said Volkov,“but what this shows is, not only is it a controlissue, you need to go down to the 10% level, [even]to the 5% level.”And this is a crucial point: against this backdropwe’re seeing a tightening of percentage thresholdsand other requirements, which feature in theshort discussion of recent regulatory changesthat follows.But board members have a “fiduciary responsibility,”added Volkov, and they didn’t ask who owned the“both of the target companies had shellcompanies in the ownership structure. In otherwords, the ultimate recipient of the money thatwas being paid [for the acquisition] was ashell company, and that was known by notonly the lawyers, it was known by the board,it was known by senior management.”Michael Volkov, former federal prosecutor and FCPA expertbvdinfo.com11
Regulatory changesIn the “recognised definitions” section of this white paper we namechecked several high-profile regulatorybodies. The diagram below summarises these, along with some of the other main drivers, showing levels ofscrutiny against time.Heightened regulatory focus on beneficial ownershipFCA Guidance(PEPs & UBOs)AML4 - UK“People withsignificant controlregistry” (2016)ScrutinyOFAC aggregate50% ownershipguidanceOFAC 50%ownershipguidanceFinCEN CDDfinal regulationsPanamaPapers impactFinCENfinancial institutionownershipreporting toincreasetransparencyOFAC/FCPAenforcementactions increaseUK BriberyAct of 2010TimeLet’s focus on two of the most important elements,starting with FinCEN’s CDD Final Rule, which wasannounced in July 2016 and will be applicable fromMay 2018. The Federal Register, the official dailyjournal of the US government, summarised it thus:“FinCEN [issued] final rules under the Bank SecrecyAct to clarify and strengthen customer due diligencerequirements for: Banks; brokers or dealers insecurities; mutual funds; and futures commissionmerchants and introducing brokers in commodities.The rules contain explicit customer due diligencerequirements and include a new requirement toidentify and verify the identity of beneficial owners oflegal entity customers, subject to certain exclusionsand exemptions.”Before this rule, this information wasn’t generallyrequired, which FinCEN said has “enable[d]bvdinfo.comcriminals, kleptocrats, and others looking to hideill-gotten proceeds to access the financial systemanonymously”. This new “beneficial ownershipidentification and verification” requirement“address[es] this weakness”.While the final rule is already starting to have aknock-on effect on the culture and expectationsof non-financial organisations, it hasn’t come intoforce and debates remain about the efficacy of“self-disclosure”, which is a feature of the rule.What has come into effect, and should now be onEU member states’ statute books, is AML4.AML4 is a wide-ranging anti-money launderingDirective, some of the key aspects and risks ofwhich we discussed in an extended blog post a fewmonths before it came into effect in June 2017.12
It contains several provisions on beneficialownership, two important ones being: The establishment of national central registers –AML4 mandates that member states create andmaintain registers containing information on thebeneficial owners of companies, including peopleof significant control (PSC). Due to their reliance oncompanies’ self-reporting, and that the informationsupplied isn’t checked by government officials,these registers often have gaps in their records oreven incorrect data; and An expanded definition of beneficial ownershipto 10% for high-risk companies – in keeping withits heightened focus on risk (and dovetailing withVolkov’s point), AML4 insists that “beneficial ownerswho have 10% ownership in certain companies thatpresent a risk of being used for money launderingand tax evasion” be included in the nationalregistries. For companies that present a lower risk,the threshold for inclusion remains at 25%.It also requires that a larger section of the publicbe given access to the beneficial ownership data inthese national registers.Are all member states up to speed on the registersfront? Well, when we assessed the situation in May,one month before AML4 came into effect, it wasa mixed picture, best illustrated by the map andchart below.Implementation status of national registers of beneficial ownership as of May 2017Countries that have implemented UBOregisters – UK, DenmarkCountries that have passed nationallegislation to implement UBO registers– Czech Republic, Germany, Ireland, TheNetherlands, SloveniaCountries that have draft laws orlegislation in progress, but not yetfully ratified – Austria, Belgium, Bulgaria,Croatia, Cyprus, Finland, France, Hungary,Italy, Portugal, Romania, Spain, SwedenCountries whose legislative progresson implementing the UBO registerprovision is stalled or unknown –Estonia, Greece, Latvia, Lithuania,Luxembourg, Malta, Poland, Slovakiabvdinfo.com13
Levels of enactment and transparency as of May 2017United KingdomDenmarkLevel of enactmentNational ownershipregistry in placeGermanyCzech RepublicIrelandSloveniaThe NetherlandsAustriaRomaniaBelgium egistry legislationpassed – on coursefor enactment bydeadlineRegistry legislationin progressRegistry legislationstalled or progressunknownLithuaniaPolandSlovakiaUnknown level oftransparencyLower level oftransparency and/orpaid accessMedium levelof transparency –legitimate interestGreater level oftransparency - publiclyaccessibleand/or freeIncreasing level of transparencyBut progress has been made, and the tide continues to flow in this direction. To demonstrate this point, noteby way of example two legislatory offshoots of AML4 in the UK.The first is a statutory instrument, the Money Laundering, Terrorist Financing and Transfer of Funds(Information on the Payer) Regulations 2017, which came into force in tandem with AML4.Part 3 deals with customer due diligence and applies to more than just banks and traditional financialinstitutions; casinos, for example, are also in scope.Among other things, it highlights in detail the importance of: identifying beneficial owners; identifyingchanges of beneficial owner; and, in some circumstances, treating senior personnel as beneficial owners.The second is the Criminal Finances Act, which became law at the end of September 2017, three monthsafter the formal implementation of AML4.Summarised by law firm Norton Rose Fulbright, it introduces new corporate criminal offences of failing toprevent facilitation of UK and foreign tax evasion, and is divided into three “stages”: tax evasion; criminalfacilitation of tax evasion by an “associated person”; and failure to prevent that facilitation.The onus here is on organisations to identify major risks and priorities, of which the identity of beneficialowners is a significant factor.In both examples, our rules aren’t just being tightened, they’re becoming more subtle, targeted and sp
The definitive guide to beneficial ownership Ideal for those who are new to the topic, or looking for a refresher course, this guide covers everything from what beneficial ownership is to the technology available to keep up with constant ownership change
May 02, 2018 · D. Program Evaluation ͟The organization has provided a description of the framework for how each program will be evaluated. The framework should include all the elements below: ͟The evaluation methods are cost-effective for the organization ͟Quantitative and qualitative data is being collected (at Basics tier, data collection must have begun)
Silat is a combative art of self-defense and survival rooted from Matay archipelago. It was traced at thé early of Langkasuka Kingdom (2nd century CE) till thé reign of Melaka (Malaysia) Sultanate era (13th century). Silat has now evolved to become part of social culture and tradition with thé appearance of a fine physical and spiritual .
On an exceptional basis, Member States may request UNESCO to provide thé candidates with access to thé platform so they can complète thé form by themselves. Thèse requests must be addressed to esd rize unesco. or by 15 A ril 2021 UNESCO will provide thé nomineewith accessto thé platform via their émail address.
̶The leading indicator of employee engagement is based on the quality of the relationship between employee and supervisor Empower your managers! ̶Help them understand the impact on the organization ̶Share important changes, plan options, tasks, and deadlines ̶Provide key messages and talking points ̶Prepare them to answer employee questions
Dr. Sunita Bharatwal** Dr. Pawan Garga*** Abstract Customer satisfaction is derived from thè functionalities and values, a product or Service can provide. The current study aims to segregate thè dimensions of ordine Service quality and gather insights on its impact on web shopping. The trends of purchases have
Chính Văn.- Còn đức Thế tôn thì tuệ giác cực kỳ trong sạch 8: hiện hành bất nhị 9, đạt đến vô tướng 10, đứng vào chỗ đứng của các đức Thế tôn 11, thể hiện tính bình đẳng của các Ngài, đến chỗ không còn chướng ngại 12, giáo pháp không thể khuynh đảo, tâm thức không bị cản trở, cái được
Le genou de Lucy. Odile Jacob. 1999. Coppens Y. Pré-textes. L’homme préhistorique en morceaux. Eds Odile Jacob. 2011. Costentin J., Delaveau P. Café, thé, chocolat, les bons effets sur le cerveau et pour le corps. Editions Odile Jacob. 2010. Crawford M., Marsh D. The driving force : food in human evolution and the future.
Le genou de Lucy. Odile Jacob. 1999. Coppens Y. Pré-textes. L’homme préhistorique en morceaux. Eds Odile Jacob. 2011. Costentin J., Delaveau P. Café, thé, chocolat, les bons effets sur le cerveau et pour le corps. Editions Odile Jacob. 2010. 3 Crawford M., Marsh D. The driving force : food in human evolution and the future.
