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Beneficial Ownership: A Comprehensive Guide

What is Beneficial Ownership?

Beneficial ownership refers to an individual who has control over a business entity, trust, or other legal structure. The definition of beneficial owner varies depending on the type of entity.

Partnerships

In partnerships, beneficial owners are individuals who have:

• Control or influence over the partnership’s decisions: This includes making key decisions that affect the direction and management of the partnership.
• Power to declare profits and dividends: Beneficial owners can decide how profits and dividends are allocated among partners.
• Authority to amend the partnership instrument: This gives beneficial owners the power to change the terms and conditions of the partnership agreement.

Additionally, a person may be considered a beneficial owner if they control a trust that owns an interest in the partnership.

Trusts

A trust is a separate legal entity governed by the Trusts Act 2018. A beneficial owner of a trust includes:

• The settlor (person who creates the trust): The individual who establishes the trust and transfers assets to it.
• Trustees: Individuals or entities responsible for managing the trust’s assets on behalf of the beneficiaries.
• Protectors: Individuals or entities with management and control powers over the trust.
• Beneficiaries: Individuals who benefit from the trust.

A person may be considered a beneficial owner if they have control over the trust, own the trust directly or indirectly, or have influence on the management and control of the trust.

FATF Requirements

The Financial Action Task Force (FATF) requires additional requirements for beneficial ownership for trusts based on transactions carried out by the trust. The identification of beneficial owners for trusts differs from corporations and partnerships.

Identifying Beneficial Owners

Beneficial owners can be identified through:

• Trustees, trustee de son tort, or similar positions: Individuals responsible for managing the trust’s assets.
• Settlors who have control over the trust: The individual who established the trust and may still have control over it.
• Protectors with management and control powers: Individuals or entities with authority to manage and control the trust.
• Beneficiaries with influence on decision-making: Beneficiaries who have a significant say in how the trust is managed.

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