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Global Effort Seeks Clarity on Beneficial Ownership of Legal Arrangements

In an effort to boost transparency and combat financial crimes, countries are being urged to require trustees to obtain and hold accurate information on the beneficial ownership of all parties involved in legal arrangements.

Identifying Settlors and Beneficiaries

According to the guidance:

• Settlors: Natural or legal persons who transfer assets to trustees must be identified as those establishing a trust. This includes individuals who provide property or funds for a trust, with an element of bounty intended to benefit others.
• Beneficiaries: Entitled to receive payouts or exercise vested rights at specific times. In cases where beneficiaries are designated by characteristics or class, trustees are not required to obtain full beneficial ownership information until the individual becomes entitled to their share.

Trustees’ Responsibilities

Trustees play a central role in legal arrangements, responsible for managing trust assets and ensuring compliance with regulatory requirements. They must:

• Identify the beneficial owners of all parties involved, including themselves if they hold similar roles as legal persons.
• In cases where trustees are legal entities, obtain information on who owns them and take reasonable measures to verify their identities.

Global Consensus

The guidance reflects a global consensus on the need for transparency in legal arrangements, building on recommendations from international organizations such as:

• Organization for Economic Co-Operation and Development (OECD)
• Financial Action Task Force (FATF)

By implementing these measures, countries can help prevent financial crimes and promote trust in the global financial system. Identifying beneficial owners is crucial to combatting money laundering, terrorist financing, and other illicit activities that threaten economic stability.

The Way Forward

As countries work to implement this guidance, they must:

• Prioritize collaboration and coordination to ensure a consistent approach across borders.
• Create a more transparent and accountable financial system that benefits all stakeholders.