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Beneficial Ownership in Nauru: A Closer Look
Understanding beneficial ownership is crucial to preventing financial crimes such as money laundering and terrorist financing. In Nauru, the Financial Action Task Force (FATF) has set standards for identifying beneficial owners of legal entities, including partnerships and trusts.
Partnerships in Nauru
A partnership is a type of business entity where two or more individuals or companies come together to run a joint venture. Under Nauruan law, a partner who is duly registered or has ownership by virtue of the Partnership Agreement is considered a beneficial owner. However, it’s essential to understand how a partnership can be indirectly controlled.
Indirect Controls
A partnership can be controlled indirectly or otherwise in several ways:
- Absolute decision-making power or veto rights
- Power to appoint or remove partners
- Entitlement to assets upon dissolution
- Control over profit sharing and retention of profits for capital investments
- Authority to amend the partnership instrument
- Other forms of control
These indirect controls can affect the management and operations of a partnership, making it essential to identify the beneficial owners.
Trusts in Nauru
A trust is another type of legal entity recognized under FATF standards. In Nauru, trusts are governed by the Trusts Act 2018. The beneficial owner of a trust can be identified as:
- A trustee, trustee de son tort, or similar position
- A settlor who establishes the trust and retains control
- A protector who manages and controls the trust
- Beneficiaries or classes of beneficiaries
The FATF requires additional requirements for identifying beneficial owners of trusts based on transactions carried out on behalf of the trust. Nauruan law provides means to identify beneficial owners, including trustees, settlors, protectors, and beneficiaries.
Conclusion
In conclusion, beneficial ownership is a critical concept in finance that requires understanding and identification. In Nauru, partnerships and trusts are subject to FATF standards for identifying beneficial owners. By recognizing the various ways in which these legal entities can be indirectly controlled, we can better prevent financial crimes and ensure transparency in business transactions.