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FATF’s Review of Beneficial Ownership

FATF_Benefical_Ownership

The Financial Action Task Force (FATF) is in the process of reviewing the definition of beneficial ownership and the transparency and beneficial ownership of legal arrangements and legal persons.

Chapter E. TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS of FATF’s Recommendations include two Recommendations (R.25 and R.24) each with adjacent Interpretive Notes. Following the amendments adopted to Recommendation 24 at the March 2022 Plenary, it was decided to update the guidance for beneficial ownership to support the implementation of the new requirements.

In order to fulfil this, the following work was proposed on October 25th 2022:

  1. Amendment to the definition of the beneficial owner to provide more clarity regarding legal arrangements. A file with suggested amendments to the term, as well as to others, can be downloaded here. Primarily the new definition makes a clear distinction between who is a beneficial owner in the context of a legal person and legal arrangement.
  2. Revision of Recommendations and their Interpretive Notes

The FATF had previously issued Public Consultations for proposed revisions of R24 and R25 with closing dates in August 2022 (white papers).

Revisions to Recommendation 24 – White Paper for Public Consultation (closed)

Revision of Recommendation 25 – White Paper for Public Consultation (closed)

Currently, the organisation expects feedback on updated Guidance papers to R24 and R25 and INR25 on the transparency and beneficial ownership of legal persons and legal arrangements by 6 December (18h00 CET).

FATF Guidance on Beneficial Ownership (Recommendation 24) – Public Consultation

Revision of R25 and its Interpretive Note – Public Consultation

Regarding R24, comments are expected particularly from companies and other legal persons, financial institutions, designated non-financial businesses and professions (DNFBPs), and non-profit organisations on:

  1. The clarity of the proposals
  2. Registries or other channels which hold lists of accurate, adequate and up-to-date beneficial ownership information
  3. Channels which can be used to verify beneficial ownership information in low-risk scenarios
  4. How can information held by stock exchanges for listed companies be used to meet beneficial ownership information obligations

Regarding R25 and INR25, comments are expected from stakeholders, including trustees, financial institutions, designated non-financial businesses and professions (DNFBPs), and non-profit organisations with regard to:

  1. The adequacy of the FATF’s proposals on mitigation of misuse of legal arrangements risk
  2. The adequacy of the FATF’s proposals on ensuring accessibility to beneficial ownership information
  3. The clarity of the proposals
  4. Challenges of implementing the proposals

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