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{{Short description|Legal term}}
{{Use dmy dates|date=May 2022}}
In domestic and international [[commercial law]], a '''beneficial owner''' is a natural person or persons who ultimately owns or controls an interest in a legal entity or arrangement, such as a company, a trust, or a foundation.<ref name="IADB_201903">{{Cite report| work = [[Inter-American Development Bank]] (IADB) and [[Organisation for Economic Co-operation and Development ]] (OECD)| title = A Beneficial Ownership Implementation Toolkit| access-date = 15 April 2020| date = March 2019| url = https://publications.iadb.org/en/beneficial-ownership-implementation-toolkit |pages=51}}</ref> Legal owners (i.e. the owners on the record), commonly described as the "[[registered owner]]s", may hold those interests as beneficial owners or for the benefit of someone else, in which case they may be described as a "nominee".▼
{{Companies law}}
▲In domestic and international [[commercial law]], a '''beneficial owner''' is a natural person or persons who ultimately owns or controls an interest in a legal entity or arrangement, such as a company, a trust, or a foundation.<ref name="IADB_201903">{{Cite report| work = [[Inter-American Development Bank]] (IADB) and [[Organisation for Economic Co-operation and Development ]] (OECD)| title = A Beneficial Ownership Implementation Toolkit| access-date = 15 April 2020| date = March 2019| url = https://publications.iadb.org/en/beneficial-ownership-implementation-toolkit |
'''Beneficial owners''' hold specific [[property rights]] ("use and title") in [[Equity (law)|equity]] belong to a person even though legal [[Title (property)|title]] of the property belongs to another person. Beneficial owner is subject to a state's statutory laws regulating interest or title transfer.<ref>''[[Black's Law Dictionary]]'' (2nd Pocket ed. 2001 pg. 508)</ref> This often relates where the legal title [[owner]] has implied [[trustee]] duties to the beneficial owner.{{clarify|reason=The preceding sentences in this para appear to be ungrammatical|date=August 2024}} A common example of a beneficial owner is the real or true [[Ownership|owner]] of funds held by a nominee bank.
==Definition==
In March 2019, an [[Inter-American Development Bank]] (IADB) report defined beneficial owners as "always natural persons who ultimately own or control a legal entity or arrangement, such as a company, a trust, a foundation".<ref name="IADB_201903" />
According to the United States' [[Securities Exchange Act]], a [[beneficial owner]] of a security includes any person who, directly or indirectly, has or shares voting or investment power.<ref name="SEC_Cornell_1998">{{Cite web| title = 17 CFR § 240.13d-3 - Determination of beneficial owner| work = [[Legal Information Institute]] (LII)| access-date = 15 April 2020| url = https://www.law.cornell.edu/cfr/text/17/240.13d-3 |date=1998 |quote=Electronic Code of Federal Regulations (e-CFR), Title 17. Commodity and Securities Exchanges, Chapter II. Securities and Exchange Commission Part 240. General rules and regulations, Securities Exchange Act of 1934, Section 240.13d-3. Determination of beneficial owner.}}</ref><ref name="Law_UC_1998">{{Cite web |title=Rule 13d-3 -- Determination of Beneficial Ownership |access-date=15 April 2020 |date=February 1998 |
The terms '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. The FATF recommendations are recognised as the global [[anti-money laundering]] (AML) and counter-[[terrorist financing]] (CFT) standard.<ref>{{Cite web|url=https://www.bvdinfo.com/en-gb/knowledge-base/white-papers/getting-to-grips-with-the-challenge-of-beneficial-ownership|title=Getting to grips with the challenge of beneficial ownership | Bureau van Dijk|website=bvd|
According to the
A [[trustee]] or [[executor]] is not normally a beneficial owner of the assets of the trust or estate.
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{{main|Financial Action Task Force}}
The [[Financial Action Task Force|Financial Action Task Force on Money Laundering]] (FATF), an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering and terrorist financing, was established in 1989,<ref name="SSRN_Chonan_20190314">{{Cite
Since 2000, FATF has compiled and maintained a "[[FATF blacklist|blacklist]]" of non-cooperative countries or territories.<ref name="LJIL_Stessens_2001">{{Cite journal| doi = 10.1017/S0922156501000097 | issn = 1478-9698| volume = 14| issue = 1| pages = 199–207| last = Stessens| first = Guy| title = The FATF 'Black List' of Non-Cooperative Countries or Territories| journal = [[Leiden Journal of International Law]]| access-date = 15 April 2020| date = March 2001| s2cid = 145417201| url = https://www.cambridge.org/core/journals/leiden-journal-of-international-law/article/fatf-black-list-of-noncooperative-countries-or-territories/7A1D543927725BCB275F848087486C7E}}</ref>
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The 2003 report clarified that a ship's beneficial owner is legally and financially responsible for the ship and its activities.<ref name="oecd4">OECD 2003, p. 4.</ref> For any of a number of reasons, some justifiable and some suspicious, shipowners who wish to conceal their ownership may use a number of strategies to achieve that goal.
Gianni wrote in 2008 that, in jurisdictions that permit it, actual owners may establish shell corporations to be the legal owners of their ships,<ref name="ITWF_Gianni_2008">{{cite report |title=Real and Present Danger: Flag State Failure and Maritime Security and Safety |first=Matthew |last=Gianni |date=2008 | access-date = 15 April 2020 |url=https://books.google.com/books?id=jW3OngEACAAJ |work=[[International Transport Workers' Federation]]|
Gianni's 2008 paper cited the 2004 Report of the UN Secretary General's Consultative Group on Flag State Implementation which said that, "It is very easy, and comparatively inexpensive, to establish a complex web of corporate entities to provide very effective cover to the identities of beneficial owners who do not want to be known."<ref name="ITWF_Gianni_2008"/>{{rp|19}}
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==Major violations==
{{expand section|date=January 2024}}
According to a 23 February 2018 article in ''[[The Diplomat]]'', in the Ablyazov Affair, involving the ex-Kazakh minister [[Mukhtar Ablyazov]], beneficial ownership was used to fraudulently move $6 billion from [[Kazakhstan]]'s [[BTA Bank]] in what is the largest case of financial fraud in history.<ref name="thediplomat_Bland_20180223">{{cite news |title=The Ablyazov Affair: 'Fraud on an Epic Scale' |url=https://thediplomat.com/2018/02/the-ablyazov-affair-fraud-on-an-epic-scale/ |publisher=The Diplomat |quote="New rounds of litigation add to the opaque case of fugitive ex-Kazakh minister Mukhtar Ablyazov." |first=Stephen M. |last=Bland |date=23 February 2018 | access-date = 15 April 2020 }}</ref>
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===Canada===
The Canadian federal Department of Finance—[[Finance Canada]] (FC)—February 2018 discussion paper, "Reviewing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime",<ref name="FC_20180207">{{Cite report| work = Department of Finance| title = Reviewing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime| access-date = 15 April 2020| date = 7 February 2018| url = https://www.canada.ca/en/department-finance/programs/consultations/2018/canadas-anti-money-laundering-anti-terrorist-financing-regime.html |
The [[Innovation, Science and Economic Development Canada]] 13 February 2020 report, entitled "Strengthening Corporate Beneficial Ownership Transparency in Canada", said that the 2016 [[Panama Papers]] and [[Bahamas Leaks]] and the 2017 [[Paradise Papers]] highlighted the "scale and ease of use of corporations and other legal entities to evade or avoid taxes and facilitate criminal activities such as money laundering, terrorist financing, and corruption."<ref name="IC_GC_20200213">{{Cite report
The ''[[Canada Business Corporations Act]]'' (CBCA) requires that certain corporations collect information on "individuals with significant control".<ref name="IC_GC_20200213"/> The CBCA says that individuals with significant control refer to "anyone with direct or indirect ownership or control over a significant number of shares of a corporation (i.e., 25% of the voting rights or fair market value of the outstanding shares), or who has any direct or indirect influence that, if exercised, would result in control in fact of the corporation, among other circumstances". This is in line with "international standards governing the definition of beneficial ownership, including those set out by the Financial Action Task Force (FATF)."<ref name="IC_GC_20200213"/>
===United Arab Emirates===
After international pressure to practice financial transparency increased, the UAE government announced the introduction of the Ultimate Beneficial Ownership or UBO law.<ref>{{cite web|url=https://www.icij.org/investigations/fincen-files/facing-global-pressure-the-united-arab-emirates-to-begin-fining-violators-of-new-corporate-transparency-rules/|title=Facing global pressure, the United Arab Emirates to begin fining violators of new corporate transparency rules|
Under the law, the UBO holding 25% of the
However, advocates question the success of introducing the new rule of reporting a
=== United Kingdom ===
The United Kingdom defines a beneficial owner (known as a 'person with significant control')<ref>{{cite web |url=https://www.gov.uk/guidance/people-with-significant-control-pscs |title=People with significant control (PSCs) |website=[[GOV.UK]] |publisher=Companies House |date=9 November 2020}}</ref> as someone who holds more than 25 per cent shares or voting rights in a company. There are several company registers of beneficial ownership. The persons with significant control (PSC) register contains the beneficial owners of UK companies and is held by Companies House. This register contains information about beneficial
In the United Kingdom until the electoral reforms of the late 19th century, a common electoral abuse involved so-called [[faggot voter]]s, nominal owners of property who were not the beneficial owners.
=== United States ===
The United States defines beneficial ownership as the individuals who directly or indirectly own or control a legal entity, such as a corporation or LLC, and who benefit from its assets or income. The Corporate Transparency Act (CTA), enacted in January 2021, introduced new requirements for filing a Beneficial Ownership Information Report (BOIR) to enhance transparency and combat financial crimes such as money laundering and terrorism financing.{{Cn|date=June 2024}} Under the CTA, certain corporations, LLCs, and similar entities are required to report information about their beneficial owners to the [[Financial Crimes Enforcement Network]] (FinCEN). This information includes the full legal name, date of birth, address, and unique identification number of each beneficial owner. The CTA aims to prevent the misuse of anonymous shell companies for illicit activities by providing law enforcement and regulatory agencies with access to accurate and up-to-date beneficial ownership information.{{Cn|date=June 2024}}
== See also ==
* [[
== Notes ==
{{Notelist}}
== References ==
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==External links==
* [https://nomineedirectors.com Nominee directors and secretarial service.]
{{Authority control}}
[[Category:Ownership]]▼
[[Category:Property law]]
[[Category:Securities (finance)]]
[[Category:Stock market]]
▲[[Category:Ownership]]
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