Finding the real owner: beneficial ownership through trusts, nominees and offshore companies

Beneficial ownership is the question at the centre of every serious due diligence file: which living person ultimately owns or controls this customer? Layered structures exist for legitimate reasons, but they are also the standard tool for hiding sanctioned parties, politically exposed persons and the proceeds of crime. The method for cutting through them is the same either way.

Own the structure chart

Draw it yourself from records, never from the customer's diagram. Start with the entity you are onboarding and pull its registry extract. Identify every shareholder and officer. For each corporate shareholder, pull its extract in its own jurisdiction. Repeat until you reach natural persons, or until you reach something that cannot be resolved from a registry: a trust, a foundation, a bearer share company, or a nominee.

Trusts

A trust is not a legal person, so it rarely appears in a company registry as anything more than the trustee's name. The documents that matter are the trust deed and any deeds of variation, the schedule of beneficiaries, and letters of wishes where the trust is discretionary. Under Australian rules the beneficial owners of a trust include the settlor, trustees, appointors and beneficiaries with vested interests, and for discretionary trusts the classes of beneficiary. Ask for the deed. A customer who will not produce it for a high risk matter is making your decision for you.

Nominees

Nominee shareholders and directors are common in Singapore, Hong Kong, the British Virgin Islands, Cyprus and several South East Asian markets where foreign ownership limits push investors toward local fronts. A nominee arrangement is not itself illegal, but it means the registered owner is not the real one. The evidence is the nominee agreement or declaration of trust, and increasingly the beneficial ownership register that many of these jurisdictions now maintain, sometimes with restricted access. Where the register exists but is not public, a licensed local professional can often obtain confirmation lawfully.

Offshore chains

Chains that run through the BVI, Cayman, Seychelles, Marshall Islands or similar centres are where most desk research stops. Registered agents will not disclose owners to the public. There are, however, lawful routes: beneficial ownership registers accessible to obliged entities, court records where the company has been litigated, leaked and published datasets that are lawful to consult, and, most reliably, the paper trail at the other end of the chain, where the offshore company holds real assets or bank accounts and the bank has already done the identification.

Control without ownership

The person who matters may hold no shares at all. Watch for powers of attorney, sole signatories on bank accounts, "consultants" who attend every meeting, family members of a politically exposed person, and shareholder agreements that give veto rights to a minority. Control is a beneficial ownership test in its own right under both Australian and UK law.

When the registry runs out

At some point on a difficult file the records stop and only people know the answer. Lawful enquiries with former business partners, industry contacts, local professionals and the press are how the last link is found, and they must be made by people who know the market and the law that governs what can be asked and recorded. This is on the ground work, and it is the difference between a file that says "ownership could not be determined" and one that says who the owner is and how we know.

Document the confidence

Every beneficial ownership conclusion should carry a confidence statement: confirmed from registry, confirmed from documents provided and corroborated, stated by the customer and not corroborated, or unknown. Decision makers can act on that. They cannot act on a chart with question marks.

Valitros traces beneficial ownership through multi jurisdiction structures as part of its enhanced due diligence work, including registry retrieval and lawful enquiries in South East Asia, Europe, the Middle East and Africa. Book a scoping call.