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Financial Institutions Must Verify Identity of Legal Representatives and Beneficial Owners

In an effort to combat money laundering and terrorist financing, financial institutions are now required to verify the identity of legal representatives and beneficial owners of their customers. The Swedish Companies Registration Office has emphasized the importance of this step in a recent statement.

Verification Requirements

According to the new regulations, financial institutions must:

• Investigate whether their customers have one or multiple beneficial owners
• Verify the identity of these individuals using the same procedures used for natural persons

Understanding Ownership and Control Structures

The investigation process should also include measures to understand the customer’s ownership and control structures. This may involve checking the Swedish Companies Registration Office’s register of beneficial owners, which provides information on legal entities with one or more beneficial owners.

Alternative Real Principal

In cases where a financial institution is unable to identify a real principal, they must appoint an alternative real principal. The alternative real principal should be identified as the individual who has the most power in the business, and their identity must also be verified.

Politically Exposed Persons (PEPs) and Asset Origin

The regulations also highlight the importance of identifying PEPs and taking adequate measures to determine the origin of their assets. Financial institutions are required to continuously evaluate their business relationships to ensure that they are current and adequate to handle the assessed risks for money laundering and terrorist financing.

Consequences of Non-Compliance

Failure to comply with these regulations can result in severe consequences, including fines and even criminal charges. As a result, financial institutions must take immediate action to verify the identity of legal representatives and beneficial owners of their customers.

Source: Swedish Companies Registration Office

Note: The article is based on the provided excerpt from the Swedish Companies Registration Office’s website, which provides information on legal persons. The data on the website is obtained from the Swedish Companies Registration Office or a corresponding register from another nation’s authority.