What is meant by beneficial ownership and beneficial owner?

The fight against financial crime, both in the world and in Russia in particular, gets worse year by year.

The outflow of capital from Russia, according to estimates of the Central Bank of the RF for 2014, amounted to more than 150 bln USD, compared to 61 bln USD in 2013. It is no secret, that significant financial resources are deposited overseas on bank accounts of individuals and legal entities, often with the use of illegal or "gray" schemes. In this context, issues of determination and verification of beneficial owners becomes more and more actual.

The efforts of the international community in this direction took shape in the establishment of the Financial Action Task Force on Money Laundering (FATF), which had been formed at the initiative of the "Big Seven" countries in 1989. The Group FATF includes 34 countries and 2 international organizations now.

In 2000 the Wolfsberg Group was organized, which joined together the world's largest banks: Banco Santander, Bank of America, Bank of Tokyo-Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan Chase, Société Générale, Standard Chartered Bank, UBS.

In 2012 the Group FATF recommended "International standards for combating money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction" to practical application for credit organizations. These standards determine the reasonable measures to verify beneficial owner, concretized in October 2014 by a special guide of FATF - "Transparency and beneficial ownership", the description of possible ways to hide the information on beneficial ownership, the interpretation of the concept "beneficial owner" and recommendations for the detection of the beneficial owners.

In May 2012 the Wolfsberg Group published the "Comments on questions of the determination of beneficial ownership, arising in the process of application of the principles of Wolfsberg Anti-Money Laundering Principles for Private Banking".

In its most general form, the main principles of determination and adequate verification of beneficial owners in order to counteract the legalization (laundering) of income received by criminal way, which are specified by above-mentioned documents, can be formulated as follows:

• beneficial owner is a natural person, who, whether through the ownership or on other grounds, ultimately controls funds on a bank account;
• beneficial ownership must be established for all bank accounts;
• adequate verification in this or that volume is required, it is carried out in any case and regardless of the requirements of national laws on disclosure of information concerning companies;
• ultimate purposes of the adequate verification are to detect disparity of the information collected by opening of an account and identify an initial primary source of funds in the bank account, i.e. a source of wealth, among them to make connections of a natural person in ownership and management structures of legal entities.

By letter of the Bank of Russia from 02.06.2015 N 014-12-4 / 4780 "On issues of definition of beneficial owners" it was explained that to identify the beneficial owners of clients by transactions with funds or other property, in accordance with the Federal Law from 07.08.2001 N 115 FZ "On counteraction to legalization (laundering) of income received by criminal way, and financing of terrorism", credit and financial institutions may use recommendations from the mentioned documents of FATF and the Wolfsberg Group.

With the help of the Information and analytical system Globas-i® it is possible to verify the ownership and management structure of legal entities in Russia, and also to order such information on foreign companies.