III. Definition of Beneficial Owners
7. Would you support the insertion of a standalone definition for beneficial owner in the context of legal arrangements (distinct from that for legal persons)? Or would it risk creating confusion with the definition of beneficial owners applicable to legal persons? What relevance should control have in the definition of beneficial ownership of legal arrangement to address AML/CFT risk?
Fundamentally, the definition of a beneficial owner and that of a legal arrangement and legal entity do not differ. For both, it is the natural person(s) who have ultimate ownership or control, and/or on whose behalf a transaction is being conducted. What this means in practice, and the specific roles that this applies to with respect to a legal entity and legal arrangement are different. Therefore, OO would welcome more details and guidance specifying which roles in a legal arrangement are beneficial owners. FATF already has a definition for trusts as part of Recommendation 10. However, this definition does not allow for multiple settlors or classes of beneficiaries. Therefore, OO recommends specifying that all parties to a trust should be considered beneficial owners of a trust or other legal arrangement:
- administrator(s) of the trust (where different from the trustee)
- (discretionary) beneficiary/ies and class(es) of beneficiaries
- any other natural person exercising ultimate effective control over the trust (including through a chain of control/ownership or through a nominee arrangement)
Furthermore, FATF should provide guidance on what minimum standards should apply and what information should be collected if any of the above is a legal entity.
8. Does limiting the information regarding beneficiaries to only those who have the power to revoke the arrangement or who otherwise have the right to demand or direct (that is, without the consent of the trustee) distribution of assets seem reasonable?
The information should cover all those listed in the answer to question 7, including all (discretionary) beneficiary/ies and class(es) of beneficiary/ies, irrespective of their specific powers.
9. Do you have any specific suggestions for a different standalone definition?
See answer to question 7.