On November 10th 2019, the changes made to the anti-money laundering regulations by Legislative Decree No. 125/2019 came into force: the new regulation modifies the principles to trace the beneficial owner and provides new specific reporting obligations for the representative association of those sector subjected to AML regulation.

The identification of the beneficial owner: which changes?

The news about the beneficial owner and the rules of identification have remained unchanged. What has changed under Legislative Decree No. 125/2019 are those principles applied to the identification process.

Who is the beneficial owner?

The definition of the beneficial owner arises from art.20, paragraph 1, of Decree 231/2007 according to which: “for customers other than natural persons, it coincides with the natural person or the persons to whom, in the last instance, the direct or indirect ownership of the entity or its control is attributed”.

Direct ownership in capital companies.

In case of capital companies (SRL and SPA) the Ultimate B.O. is the natural person(s) who holds an interest of more than 25,00% of the Company shares.

There are cases where direct or indirect ownership can not be traced.

In this case the beneficial owner must be traced in the person who controls:

  1. the majority of the votes that can be exercised at the ordinary shareholders’ meeting;
  2. votes sufficient for a dominant influence in this assembly;
  3. as a result of particular contractual ties, is able to exercise (at the Shareholders’ Meeting) a dominant influence.

In all cases in which it is not possible to identify the beneficial owner using the principles set out in points 1, 2, 3, the latter must be identified in the “natural persons who, in accordance with each organizational or statutory structures, hold powers of legal representation, administration or management of the company or client”.

Practical problems: keeps these cases in mind!

Difficulties arises when, during the audit process, is not possible to identify the beneficial owner with a direct ownership principle:

  1. during the screening process you must “climb each ladder” of the chain of control, to trace the individuals who indirectly own a percentage of shareholding greater than 25%. In this case it is necessary to assess if the declarations released by the Client are true and congruent, or if otherwise are not matching;
  2. if no natural person directly or indirectly owns more than the 25%, you can search a persons who exercise a dominant influence at the General Meeting, by acquiring official evidences that can stand as proof (for example: copies of voting syndicate agreements or shareholders’ agreements).
  3. In none of these figures is traceable, the persons with powers of administration or management of the company is the Ultimate Beneficial Owners.

The more we are far from a direct tracing of ultimate beneficial owner, the more you are dealing with a company structure that is opaque, non-transparent; with a clear risk of dealing with companies whose management is unknown.

Investigative advantage in identifying the beneficial owner

Each company can advantage from the right tools.

Cheope match strong ability in data providing, both official and investigative, with a focus to the Client’s need.

We are able to provide official evidences and investigative focus, linked together by a strong and clear reporting.

Our AML and CFT screening Service are shaped by our expertise and the constant attention to legislative frame.

And when you need assistance, CHEOPE’ staff is ready to support you directly from the headquarters in Lodi, Viale Milano 40.

Get in touch with us; we will empower together your AML process.