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Identifying Beneficial Owners Under IFSCA (AML, CFT, & KYC Guidelines)
Identifying Beneficial Owners Under IFSCA (AML, CFT, & KYC Guidelines)
IFSCA guidelines mandate that the regulated entities, whether Financial Institutions or Designated Non-Financial Businesses and Professions, must identify beneficial owners as it is essential to the customer due diligence process.
A company’s beneficial owner is a natural person with controlling ownership interests more than 10% of shares/capital or the company’s profit. Besides that, the person exercising controls, such as appointing a majority of the directors and management functions and policy decisions, is also considered a beneficial owner. It must also be noted that the beneficial owner has the ultimate effective control over a legal person or arrangement.
In the case of a partnership firm, the beneficial owner is the natural person who owns more than 10% of the partnership’s capital or profits. In the case of an unincorporated association/body of individuals (BOI), the beneficial owner is the person who owns more than 15% of the property, or capital, or profits of such association/BOI.
Similarly, when your business is dealing with a trust, the author of the trust, trustee, and beneficiaries who own 10% or more interests in the trust are considered beneficial owners. A person having ultimate control over the trust is also considered the beneficial owner.
When you can’t identify the beneficial owner, consider senior management of the legal person or legal arrangement as the beneficial owners.
We are committed to assisting proper enforcement of AML and CFT regulations to regulated entities in India by designing a personalised AML framework – policies, internal controls, and procedures – and ensuring effective implementation of the same.
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