When you're vetting a potential client and the corporate structure looks like a matryoshka doll, you need more than standard Customer Due Diligence (CDD). You need a systematic Enhanced Due Diligence (EDD) questionnaire that forces transparency where opacity is the default.
This template provides a structured interview framework for shell companies. It's designed to surface the red flags FATF and FinCEN expect you to catch: unclear beneficial ownership, unexplained cross-border flows, and asset concealment patterns.
Purpose of the Template
Use this questionnaire when your initial CDD reveals:
- A corporate entity with no active business operations or significant assets
- Registration in a jurisdiction known for relaxed corporate governance or financial secrecy
- Third-party management with no clear operational employees
- Ownership structures that obscure the ultimate beneficial owners
The questionnaire requires the client to provide specific, verifiable information across three risk areas: ownership structure, business purpose, and transaction patterns. You're not trying to reject every shell company outright; you're trying to determine whether the structure serves a legitimate purpose or conceals illicit activity.
Prerequisites
Before using this questionnaire:
- Complete standard CDD and confirm the entity meets your definition of a shell company.
- Verify that your institution's risk appetite permits shell company relationships under any circumstances.
- Assign the case to an analyst trained in UBO verification and trade-based money laundering typologies.
- Confirm you have access to corporate registry databases, watchlist screening tools, and adverse media sources for the relevant jurisdictions.
The Questionnaire Template
Section 1: Ultimate Beneficial Ownership
List all individuals who directly or indirectly own 25% or more of the entity. For each individual, provide:
- Full legal name
- Date of birth
- Residential address (not a registered agent address)
- Nationality and country of residence
- Percentage of ownership (direct and indirect)
- Source of funds used to acquire ownership stake
If no individual owns 25% or more, identify the senior managing official and provide the information above.
Describe the complete ownership chain from the shell company to each ultimate beneficial owner. Include:
- Names and jurisdictions of all intermediate entities
- Ownership percentages at each tier
- Explanation for each layer's business purpose
Attach certified copies of:
- Articles of incorporation or equivalent formation documents
- Shareholder register
- Corporate structure chart showing all entities in the ownership chain
- Government-issued identification for each UBO
Section 2: Business Purpose and Operations
Describe the specific business purpose for establishing this entity. Why was this particular jurisdiction selected?
List all jurisdictions where the entity:
- Maintains bank accounts
- Holds assets
- Conducts transactions
- Has operational presence (if any)
Does the entity have any employees? If yes, how many, and in what locations? If no, who performs day-to-day management functions?
Provide contact information for:
- Physical business address (not a registered agent)
- Primary business phone number
- Email address for senior management
- Names and contact details for all authorized signatories on accounts
List all financial institutions where the entity currently maintains relationships. For each, specify account types and approximate balances.
Section 3: Transaction Activity and Purpose
Describe the anticipated transaction activity for the next 12 months:
- Expected monthly transaction volume (number of transactions)
- Expected monthly transaction value
- Primary counterparties (names, jurisdictions, relationships)
- Types of transactions (wire transfers, trade finance, investments, etc.)
For any anticipated cross-border transactions:
- Origin and destination countries
- Economic purpose of the cross-border flow
- Relationship between counterparties
If the entity will engage in trade transactions, provide:
- Description of goods or services
- Names and locations of suppliers
- Names and locations of customers
- Explanation of the entity's role in the transaction chain
Source of funds: Where will the money flowing through this entity originate? Provide documentation supporting the source (employment contracts, sale agreements, inheritance documents, etc.).
Has any UBO, director, or authorized signatory ever been:
- Subject to regulatory enforcement action
- Named in adverse media related to financial crime
- Designated as a Politically Exposed Person
- Associated with a high-risk jurisdiction or sanctioned entity
Section 4: Supporting Documentation
- Attach the following within 15 business days:
- Most recent financial statements (audited if available)
- Tax returns for the past two years
- Proof of business operations (contracts, invoices, correspondence with counterparties)
- Bank statements for the past six months from all accounts
- Licenses or permits relevant to stated business activities
How to Customize It
Adjust the ownership threshold in Question 1 based on your jurisdiction's requirements. The 25% threshold aligns with FATF recommendations, but some regulators require disclosure at 10% or lower.
Add industry-specific questions if the shell company operates in a sector with known money laundering risks. For real estate holding companies, ask about property acquisition financing. For investment vehicles, request details on portfolio composition and fund sources.
Modify the documentation timeline in Section 4 based on your risk tolerance. Higher-risk profiles warrant shorter deadlines.
If your institution uses automated watchlist screening, note in the questionnaire that all named individuals and entities will be screened against OFAC, UN, EU, and relevant sanctions lists, plus PEP databases.
Validation Steps
After you receive completed responses:
Verify UBO identity: Screen each named UBO against government-issued ID. Cross-reference addresses and dates of birth against public records where available.
Test the ownership chain: Trace backwards from the shell company through each intermediate entity. Request corporate registry extracts from each jurisdiction. If the client can't produce verifiable documentation for any link in the chain, escalate.
Assess business purpose plausibility: Does the stated purpose justify the jurisdictional choices and ownership complexity? A shell company formed in the British Virgin Islands to hold intellectual property for a U.S. tech company may be defensible. The same structure for a cash-intensive retail business is not.
Match transactions to stated purpose: When the account becomes active, compare actual transaction patterns to the projections in Questions 10-12. Significant deviations trigger re-evaluation.
Screen for adverse information: Run all named individuals and entities through adverse media searches, focusing on money laundering, fraud, corruption, and sanctions evasion. Document your findings even if the search returns no hits.
Escalate unclear answers: Vague responses to Questions 5, 9, or 13 indicate the client either doesn't understand their own structure or is concealing information. Both warrant escalation to your compliance officer.
If the client refuses to answer any question or can't provide supporting documentation within your deadline, that's your answer. You don't have sufficient information to manage the risk, and the relationship should not proceed.
This questionnaire won't catch every illicit shell company, but it forces the kind of transparency that makes money laundering harder. The clients who can't or won't provide clear answers are precisely the ones your EDD process is designed to filter out.
