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Verification of Legal Persons and Representatives

In an effort to combat money laundering and terrorist financing, businesses are required to verify the identity of legal persons and their representatives. This process involves checking registration certificates, register excerpts, or data from other independent and reliable sources.

Verification Process for Legal Persons

For legal persons, the registration certificate or corresponding register excerpt should not be older than a week at the verification occasion. If an excerpt is obtained from a website that provides data on legal persons, it must be clarified that the data is obtained from the Swedish Companies Registration Office or a corresponding register from another nation’s authority.

Verification Process for Representatives

The representative of a legal person must also be identified and verified through the same procedures as for other physically present customers. The representative’s authorization to represent the legal person must be checked against power of attorney documentation, appointment certificate, or corresponding authorisation documentation.

Beneficial Owners

Businesses are also required to investigate whether a customer has one or multiple beneficial owners. A beneficial owner is defined as a person (or persons) who owns or controls the customer on their own (or together). The Act on Registration of Real Principals outlines the circumstances under which a legal person can be assumed to have a beneficial owner.

Investigation Process for Beneficial Owners

If a customer has one or multiple beneficial owners, their identity must be verified in the same way as for customers who are natural persons. If the customer is a legal person, a trust, or a similar legal construction, the investigation should include measures to understand the customer’s ownership and control structures.

Register of Beneficial Owners

The Swedish Companies Registration Office provides a register of beneficial owners, which can serve as a starting point for investigations.

Exceptions from Investigation Obligation

Customers that are limited companies (Ltd) and whose shares are traded on a regulated market in Sweden, within EES, or in a corresponding market outside the EES are exempt from the investigation obligation.

Alternative Real Principal

If the result of an investigation clarifies that a customer does not have a real principal, an alternative real principal must be appointed. The same applies if there is reason to believe that the identified real principal does not ultimately own or control the customer. The alternative real principal’s identity must also be verified.

Politically Exposed Persons (PEP)

Businesses are required to investigate whether a customer or their real principal is a PEP, or alternatively, a family member or known co-worker of a PEP. A PEP is defined as someone who has or had a prominent position in a nation or an important leadership function in an international organisation.

Actions for PEP

If the customer is a PEP, or a relative to a PEP, adequate actions must be taken to determine the origin of their assets and apply a continuous and enhanced evaluation of the business relation.

Purpose and Nature of Business Relation

Before establishing a business relation, businesses are required to gather information about the purpose and nature of the relation. This includes understanding what the customer’s business is about and how they will use the products or services provided.

Scope of Investigation

The scope of an investigation depends on the assessed risk attributed to the business relation. A higher risk requires additional, more in-depth questions, while a lower risk may allow for assumptions based on how customers normally use products or services.

Customer Due Diligence Measures

Businesses must adjust their customer due diligence measures according to their risk assessment of a single customer - the customer’s risk profile. The measures mentioned above must always be applied when dealing with a normal risk customer. If the assessed risk is low, simplified measures can be taken. If the assessed risk is high, extended customer due diligence measures must be taken.

Continuous Evaluation of Business Relations

Current business relations must be evaluated continuously to ensure that customer due diligence is current and adequate to handle the assessed risks for money laundering and terrorist financing. The evaluation should aim at renewed verification of representatives and beneficial owners as well as renewed focus on the purpose and nature of the business relation.

Measures to Take if Customer Due Diligence is Lacking

Businesses may not enter into or maintain a business relation with a customer, or carry out single transactions, if they have not achieved customer due diligence.