Identification of Beneficial Owner

 Knowledge Sharing :Identification of Beneficial Owner

FATF has called for countries to use a “multipronged approach” to ensure that “adequate, accurate and up-to-date” beneficial ownership information is available to competent authorities. This multipronged approach requires both companies and the government to collect and maintain beneficial ownership information, the latter through a beneficial ownership registry or alternative mechanism.

FATF made clear that beneficial ownership information should be verified. It also revised Recommendation 24 to require that countries assess the money laundering and terrorist financing risks for foreign-created legal persons with sufficient links to their country, and take steps to manage and mitigate these risks.

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1) Why Reporting Institution and Financial Institutions need to identify BO?

A) The main reason for identifying the UBO is that it enhances a business' regulatory compliance position. Conducting thorough due diligence will also help identify any individuals who have been previously flagged with money laundering activities.

B)ask yourself- To what extent do you know the ownership structure and control structure of the entities?

C) Money launderer/ Fraudster / Corrupted person will always hiding or conceal their identity by complex structure or controlling

2) Lesson Learned?
Panama Papers (2016)
Paradise Papers (2017)
Pandora Papers (2021)
3.8 Billion Govt Project CARTELS( 2021)

3) How to identify BO?
Rule no 1- BO must be a person and cannot be an entity.

Rule no 2- Identify individual holding 25% interest/ ownership (Direct and Indirect interest /ownership). Have you validate the info? .If no person holding 25% then only move to rule no 3.

Rule no. 3 - individual who has controlling power on the entity (such as authorized signatory or have influence to appoint or remove any Directors / Senior Management. Have you validate the info? If cannot identify...move to rule no 4.

Rule no 4- Senior Management of the entity such as CEO or equivalent, COO or equivalent,CFO or equivalent, Chairman, Secretary or Treasurer, depends on the structure of the entity.

Tips to identify BO ; (ask yourself);
1) Have you demonstrate your best effort in identifying the BO.

2) Do you really you know the ownership structure and control structure of the entities?

Sir Nazri
Kuala Lumpur

#awareness #education #FollowTheMoney #dakwah #beneficialownership