Your team needs to ensure timely access to beneficial ownership data to strengthen your anti-money laundering (AML) framework. Recent changes in how jurisdictions structure access to this data mean your organization must now navigate three distinct regulatory models.
Changes in Beneficial Ownership Requirements
Regulators no longer accept excuses for failing to identify the ultimate beneficial owner (UBO). Jurisdictions now require specific mechanisms to capture and verify beneficial ownership information before onboarding a customer. While the 25% ownership or control threshold remains standard, the method for obtaining and verifying this information depends on where your customer's legal entity is registered.
Pressure comes from two directions. Competent authorities expect you to produce accurate beneficial ownership data during examinations. Your customer due diligence process must now include verification steps beyond self-certification. You're expected to cross-reference public registries, corporate filings, and stock exchange disclosures where applicable.
Three Regulatory Models
Model 1: Registry-held information
Some jurisdictions require company registries to maintain current beneficial ownership data. Your compliance team queries the registry during customer onboarding. This model works well when the registry is accessible, frequently updated, and includes verification standards. However, not all registries enforce the same data quality requirements, and cross-border access can vary.
Model 2: Company-held information
Other jurisdictions require the legal entity itself to hold beneficial ownership information. You request this information directly from your customer during onboarding. The company must identify anyone who owns or controls more than 25% of shares, voting rights, capital, or earnings. Your responsibility is to cross-check the company's self-reported data against public information and corporate searches.
Model 3: Competent authority aggregation
This approach relies on existing information held by regulators, financial institutions, and stock exchanges. For publicly listed companies, disclosure requirements may provide adequate transparency. For private entities, you piece together beneficial ownership from multiple sources: your Customer Identification Program data, corporate registry filings, and information held by other competent authorities.
Bearer shares and nominee arrangements
Jurisdictions that permit bearer shares or nominee shareholders face higher money laundering risks. If your customer is incorporated in such a jurisdiction, expect additional due diligence requirements. You'll need to verify that the legal entity has measures to prevent misuse, often through immobilization of bearer instruments or mandatory disclosure of nominee arrangements.
Partnership structures
For partnerships, the beneficial owner is anyone entitled to or controlling more than 25% of capital, earnings, or voting rights, including indirect control. Your verification process must trace ownership through multiple layers if the partnership structure includes corporate partners.
Implications for Your AML Team
You can't apply a single verification workflow to all legal entity customers. Your Customer Identification Program must account for the jurisdiction of incorporation and the applicable regulatory model.
If the customer is in a registry-held jurisdiction, integrate registry access into your onboarding workflow. If the jurisdiction uses a company-held model, your due diligence checklist must include a request for the company's beneficial ownership records and a verification step against independent sources.
For customers in jurisdictions allowing bearer shares or nominees, escalate the review. You're expected to obtain additional documentation proving the legal entity has mitigated misuse risk.
Simply asking the customer "who owns you?" and accepting their answer no longer meets regulatory expectations. Competent authorities expect you to verify self-certified information through public searches, corporate filings, and cross-referencing with other available data.
Action Items by Priority
Immediate: Map your customer base to regulatory models
Identify which jurisdictions your legal entity customers are incorporated in. Categorize them by whether the jurisdiction uses registry-held, company-held, or aggregated information models. This mapping tells you which verification workflow applies to each customer segment.
Within 30 days: Update your CDD procedures
Revise your Customer Identification Program to include jurisdiction-specific verification steps. For registry-held jurisdictions, document your registry access process and update frequency. For company-held models, add a verification requirement that cross-checks customer-provided data against public information. For partnerships, ensure your workflow traces indirect ownership and control.
Within 60 days: Build cooperation mechanisms
If you operate in a jurisdiction requiring legal entities to cooperate with competent authorities, establish one of three mechanisms: require customers to authorize a natural person resident in the country to provide beneficial ownership information; require customers to authorize a designated non-financial business or profession to provide such information; or implement a comparable measure that ensures cooperation. Document which mechanism you use and how you enforce it.
Within 90 days: Enhance bearer share and nominee screening
For customers in jurisdictions permitting bearer instruments or nominee arrangements, add a due diligence step that verifies mitigation measures. Request documentation showing bearer shares are immobilized or that nominee arrangements are disclosed. If the customer can't provide this, escalate the risk rating.
Ongoing: Maintain current beneficial ownership records
Beneficial ownership changes. Build a refresh cycle into your periodic review process. For higher-risk customers, verify beneficial ownership annually. For standard-risk customers, verify during periodic reviews or when you detect a material change in the customer relationship.
