Global anti-money laundering (AML) standards have long required that understanding beneficial ownership be a part of a financial institution's AML program. Identifying beneficial ownership, however, can be a complex process.
Beneficial ownership outlines the identity of individuals with a controlling interest in a privately-held company, enabling a financial institution to understand the ultimate beneficiary of a financial transaction. With new guidance from the Financial Action Task Force on Money Laundering (FATF) and specific local legislation and rules from the likes of the U.S. Financial Crimes Enforcement Network (FinCEN), the Monetary Authority of Singapore and the European Union, beneficial ownership has grown as a hot topic for AML compliance professionals globally. In fact, with the introduction of the Fourth EU AML Directive, EU members will be required to keep central registers where companies subject to AML regulation must contribute information on beneficial ownership of their clients and related entities.
Identifying ultimate beneficial ownership can be challenging, particularly in cases where an intermediate entity resides in a jurisdiction where AML requirements are not as stringent or data privacy provisions are particularly strong.
What can institutions do to streamline this process while remaining compliant with industry rules and regulations? Sophisticated risk management practices built on a strong foundation of technology and powerful visualization capabilities can help with identification and with distinguishing between legitimate and suspect entities. In short, it's all about the technology.