Anti-money laundering – words and expressions
On this website, we clarify some key words and expressions in connection with anti-money laundering checks and required knowledge about our clients.
Beneficial owners
Beneficial owners are natural persons who ultimately owns or controls a customer or on whose behalf a transaction is being conducted. A natural person shall in all cases be considered a beneficial owner if the person alone or together with close family members*: (a) holds more than 25 per cent of the ownership interests in the legal entity or association; (b) due to a shareholding, unit holding or membership controls more than 25 per cent of the total number of votes in the legal entity or association; (c) has the right to appoint or unseat more than half of the directors or equivalent of the legal entity; (d) due to an agreement with owners, members, the legal entity or association, articles of association or similar, may exercise control in accordance with letters (a), (b) or (c); or (e) otherwise controls the legal entity or association.
If one or more natural persons, through control over one or more legal entities, foundations, foreign legal arrangements or other associations, exercise control over another legal entity or association in a manner as specified in the first paragraph, such natural person or persons shall be held to exercise control over the latter legal entity or association as well.
*Close family members: 1. parents, 2. spouse, 3. registered partner, 4. co-habitant, 5. child, 6. child’s spouse, registered partner or co-habitant.
In foundations, the following are beneficial owners
- a natural person who is a director or the general manager of the foundation.
- a natural person who has been expressly designated to appoint a majority of the directors of the foundation. If a legal entity has been expressly designated to appoint a majority of the directors of the foundation, the beneficial owners of such legal entity are also beneficial owners of the foundation.
- a natural person who has provided primary capital to the foundation. If anyone other than a natural person has provided primary capital to the foundation, the beneficial owners of the providing entity are also beneficial owners of the foundation.
- a natural person who has been accorded special rights pursuant to section 9, first paragraph, letter d of the Foundations Act. If anyone other than a natural person has been accorded special rights pursuant to section 9, first paragraph, letter d of the Foundations Act, the beneficial owners of the entity that has been accorded special rights are also beneficial owners of the foundation.
- a natural person who has been expressly designated a beneficiary. If anyone other than a natural person has been expressly designated a beneficiary, the beneficial owners of such beneficiary are also beneficial owners of the foundation.
In foreign trusts, the following are beneficial owners:
- the founder
- the trustee
- the protector
- the beneficiaries or, where individual beneficiaries have yet to be determined, the class of beneficiaries who have a main interest in the setting up or management of the trust or similar legal arrangement
- any other natural person exercising control over the trust or similar legal arrangement by means of direct or indirect ownership or by other means
PEP – Politically Exposed Person
A PEP (politically exposed person) is a natural person who (i) holds or has held a prominent public function or position; (ii) is a close family member of a person mentioned under (i); or (iii) is known to be a close associate of a person mentioned under (i).
A holder of a prominent public function or position means:
- head of state, head of government, minister/assistant minister
- member of a national assembly
- member of a governing body of a political party
- member of a high-level judicial body, the decisions of which are not subject to further appeal, except in exceptional circumstances
- member of the board of an auditor general’s office, a court of auditors or a central bank
- ambassador, chargé d’affaires or high-ranking officer of the armed forces
- member of an administrative, management or supervisory body of a state-owned enterprise, or
- executive director, member of the board or other person in the senior management of an international organisation.
By close family member as mentioned under (ii) is meant: 1. parents, 2. spouse, 3. registered partner, 4. co-habitant, 5. child, 6. child’s spouse, registered partner or co-habitant.
By person known to be a close associate as mentioned under (iii) is meant a natural person who is known to: 1. have joint beneficial ownership of a legal entity, association or foreign legal arrangement with a person as mentioned under (i); 2. have close business relations with a person as mentioned under (i); or, 3. have the sole beneficiary ownership of a legal entity, association or foreign legal arrangement which has been set up for the de facto benefit of a person as mentioned under (i).
