Beneficial Owner

Definition

A Beneficial Owner is the natural person who ultimately owns or controls an entity, trust, foundation, or other legal arrangement. Ownership or control can be direct (e.g., holding shares in their own name) or indirect (e.g., through other companies, nominees, or arrangements).

The concept is central to the UK’s Money Laundering Regulations 2017 and linked to the People with Significant Control (PSC) register for companies and the Trust Registration Service (TRS) for relevant trusts.

Why it matters

Identifying the beneficial owner is critical to prevent money laundering, terrorist financing, tax evasion, and other financial crimes. Without transparency, complex structures can conceal the true parties behind a transaction or asset.

UK law requires regulated firms to identify, verify, and record the beneficial owner as part of their due diligence process.

How beneficial ownership identification works

1. Ownership threshold – Identify any person holding more than 25% of shares or voting rights, or otherwise exercising significant control.
2. Indirect control – Trace through corporate layers or nominees to find the ultimate owner.
3. Verification – Confirm identity using reliable, independent sources (e.g., passport, corporate filings).
4. Recording – Maintain evidence and disclose to the relevant register (PSC or TRS) where required.
5. Ongoing review – Update records if ownership or control changes.

Examples and use cases

• Company – An individual owns 60% of shares through a holding company.
• Trust – A settlor retains control through appointment powers.
• Foundation – A founder has the right to appoint board members controlling the assets.
• Joint venture – One party exercises control through contractual rights rather than shareholding.

Mini-FAQ

Q: How is a Beneficial Owner different from a UBO (Ultimate Beneficial Owner)?
A: In most contexts, they mean the same thing. "UBO" is more common internationally, while "beneficial owner" is the UK statutory term.

Q: Is beneficial ownership information public?
A: For UK companies, details are on the PSC register. For trusts, the TRS is not public but can be accessed by certain authorities and, in some cases, interested parties.