Draft Amendment Text to R.24 and INR.24
Note on formatting: The current text of the Recommendation and Interpretive Note are shown in normal black text. All proposed amendments, including the ones agreed at the October PDG, are coloured in red, with and
Recommendation 24. Transparency and beneficial ownership of legal persons
take measures to prevent the misuse of legal persons for money laundering or terrorist financing. Countries should ensure that there is adequate, accurate and timely
information on the beneficial ownership and control legal persons that can be obtained or accessed rapidly and efficiently in a timely fashion by competent authorities
. In particular, c
ountries that have legal persons that are able to
issuebearer shares or bearer share warrants
, or which allow nominee shareholders or nominee directors, should take effective measures to ensure that
they are not misused for money laundering or terrorist financing. Countries should consider measures to facilitate access to beneficial ownership and control information by financial institutions and DNFBPs undertaking the requirements set out in Recommendations 10 and 22.
Interpretive Note to Recommendation 24 (Transparency and Beneficial Ownership Of Legal Persons)
1. Competent authorities should
be able to obtain, or have access in a timely fashion to, adequate, accurate and current information on the beneficial ownership and control of companies and other legal persons (beneficial ownership information
) that are created
in the country Countries may choose the mechanisms they rely on to achieve this objective, although they should also comply with the minimum requirements set out below. It is also very likely that cCountries will need to
utilise a combination of mechanisms to achieve the objective.
2. As part of the process of ensuring that there is adequate transparency regarding legal persons, countries should have mechanisms that:
a) identify and describe the different types, forms and basic features of legal persons in the country.
b) identify and describe the processes for: (i) the creation of those legal persons; and (ii) the obtaining and recording of basic and beneficial ownership information;
c) make the above information publicly available; and
d) assess the money laundering and terrorist financing risks associated with different types of legal persons created in the country.
A. Basic information
3. In order to determine who the beneficial owners of a company are, competent authorities will require certain basic information about the company, which, at a minimum, would include information about the legal ownership and control structure of the company. This would include information about the status and powers of the company, its shareholders and its directors.
4. All companies created in a country should be registered in a company registry  . Whichever combination of mechanisms is used to obtain and record beneficial ownership information (see section B), there is a set of basic information on a company that needs to be obtained and recorded by the company  as a necessary prerequisite. The minimum basic information to be obtained and recorded by a company should be:
a) company name, proof of incorporation, legal form and status, the address of the registered office, basic regulating powers (e.g. memorandum & articles of association), a list of directors
(where this exists); and
b) register of its shareholders or members, containing the names of the shareholders and members and number of shares held by each shareholder  and categories of shares (including the nature of the associated voting rights).
6. The company should maintain the basic information set out in paragraph 4(b) within the country, either at its registered office or at another location notified to the company registry. However, if the company or company registry holds beneficial ownership information within the country, then the register of shareholders need not be in the country, provided that the company can provide this information promptly on request.
B. Beneficial ownership information
10. All the persons, authorities and entities mentioned above, and the company itself (or its administrators, liquidators or other persons involved in the dissolution of the company), should maintain the information and records referred to for at least five years after the date on which the company is dissolved or otherwise ceases to exist, or five years after the date on which the company ceases to be a customer of the professional intermediary or the financial institution.
C. Timely access to adequate, accurate, and up-to-date information
11. Countries should have mechanisms that ensure that basic information, including information provided to the company registry , is accurate and .
Countries should require that is accurate and is kept as current and up-to-date as possible, and the information should be updated within a reasonable period following any change.
12. Competent authorities, and in particular law enforcement authorities, should have
all the powers necessary to be able to obtain timely access to the basic and beneficial ownership information held by the relevant parties
13. Countries should require their company registry to provide and/or facilitate timely access by financial institutions, DNFBPs and other countries’ competent authorities to the
public information they hold, and, at a minimum, to the basic information referred to in paragraph 4 (a) above. Countries should also consider facilitating timely access by financial institutions and DNFBPs to information referred to in paragraph 4(b) above and to beneficial ownership information held pursuant to paragraph 7 above, as well as
D. Obstacles to transparency
14. Countries should take measures to prevent the misuse of bearer shares and bearer share warrants
, for example
by applying one or more of the following mechanisms
(a) prohibiting them
converting them into a registered form; or
immobilising them by requiring them to be held with a regulated financial institution or professional intermediary
requiring holders of bearer instruments to notify the company, and the company to record their identity
15. Countries should take measures to prevent the misuse of nominee shareholding and nominee directors,
for example by applying one or more of the following mechanisms
a) requiring nominee shareholders and directors to disclose the identity of their nominator to the company and to any relevant registry
, and for this information to be included in the relevant registers as part of basic information; or
b) requiring nominee shareholders and directors to be licensed
, for their nominee status
recorded in company registr
and for them to maintain information identifying their nominator and the natural person on whose behalf the nominee is ultimately acting
, and make this information available to the competent authorities upon request
E. Other legal persons
16. In relation to foundations, Anstalt,, and limited liability partnerships, countries should take
similar measures and impose
similarrequirements, as those required for companies, taking into account their different forms and structures.
17. As regards other types of legal persons, countries should take into account the different forms and structures of those other legal persons, and the levels of money laundering and terrorist financing risks associated with each type of legal person, with a view to achieving appropriate levels of transparency. At a minimum, countries should ensure that
similar types of basic information should be recorded and kept accurate and current by such legal persons, and that such information is accessible in a timely way by competent authorities. Countries should review the money laundering and terrorist financing risks associated with such other legal persons, and, based on the level of risk, determine the measures that should be taken to ensure that competent authorities have timely access to adequate, accurate and current beneficial ownership information for such legal persons.
E. Liability and sanctions
18. There should be a clearly stated responsibility to comply with the requirements in this Interpretive Note, as well as liability and effective, proportionate and dissuasive sanctions, as appropriate for any legal or natural person that fails to properly comply with the requirements.
G. International cooperation
19. Countries should rapidly, constructively and effectively provide of international cooperation in relation to basic and beneficial ownership information held by public authority or body, on the basis set out in Recommendations 37 and 40. This should include (a) facilitating access by foreign competent authorities to basic information held by company registries; (b) exchanging information on shareholders
; and (c) using their powers, in accordance with their domestic law, to obtain beneficial ownership information on behalf of foreign counterparts. Countries should monitor the quality of assistance they receive from other countries in response to requests for basic and beneficial ownership information or requests for assistance in locating beneficial owners residing abroad. .
Bearer shares and bearer share warrants
Bearer shares refers to negotiable instruments that accord ownership in a legal person to the person who possesses the bearer certificate, .
Beneficial owner refers to the natural person(s) who ultimately1 owns or controls a customer2 and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. .
1 Reference to “ultimately owns or controls” and “ultimate effective control” refer to situations in which ownership/control is exercised through a chain of ownership or by means of control other than direct control.
2 This definition should also apply to beneficial owner of a beneficiary under a life or other investment linked insurance policy.
As set out in R.10, in the context of CDD i
, and, to the extent that there is doubt about whether a person with a controlling ownership interest in a legal person is the ultimate beneficial owner, or where no natural person exerts control through ownership interests,
how CDD should be conducted
Please refer to the IN to Recommendation 8.
The meaning of the term beneficiary in the FATF Recommendations depends on the context:
In trust law, a beneficiary is the person or persons who are entitled to the benefit of any trust arrangement. A beneficiary can be a natural or legal person or arrangement. All trusts (other than charitable or
 Beneficial ownership information for legal persons is the information referred to in the interpretive note to Recommendation 10, paragraph 5(b)(i). Controlling shareholders as referred to in, paragraph 5(b)(i) of the interpretive note to Recommendation 10 may be based on a threshold, e.g. any persons owning more than a certain percentage of the company ( ).
 References to creating a legal person, include incorporation of companies or any other mechanism that is used.
Countries may determine what is considered a
on the basis of risk. Examples of sufficiency tests
 “Company registry” refers to a register in the country of companies incorporated or licensed in that country and normally maintained by or for the incorporating authority. It does not refer to information held by or for the company itself.
 The information can be recorded by the company itself or by a third person under the company’s responsibility.
 This is applicable to the nominal owner of all registered shares.
 This requirement does not apply to bearer shares or bearer share warrants of a company listed on a stock exchange and subject to disclosure requirements (either by stock exchange rules or through law or enforceable means) which impose requirements to ensure adequate transparency of beneficial ownership.
Countries may instead choose to prohibit the use of nominee shareholders or nominee directors. If so, the prohibition should be enforced.
Identifying the beneficial owner in situations where a nominee holds a controlling interest or otherwise exercises effective control requires establishing the identity of the natural person(s) on whose behalf the nominee is ultimately, directly or indirectly, acting.
For intermediaries involved in such nominee activities, reference should be made to R.22 and R.28 in fulfilling the relevant requirements.