In March 2019, an Inter-American Development Bank (IADB) report defined beneficial owners as "always natural persons who ultimately own or control a legal entity or arrangement, such as a company, a trust, a foundation".
[7] The Financial Action Task Force on Money Laundering (FATF), an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering and terrorist financing, was established in 1989,[8] and sets international standards related to beneficial ownership, including the definition of beneficial ownership,[9] which it defines as the natural person(s) who ultimately owns or controls a legal entity and/or the natural person on whose behalf a transaction is being conducted.
[10] According to the OECD's 2003 December report, entitled "Ownership and Control of Ships", corporate structures are often multi-layered, spread across numerous jurisdictions, and make the beneficial owner "almost impenetrable" to law enforcement officials and taxation.
[11][12] The report concludes that "regardless of the reasons why the cloak of anonymity is made available, if it is provided it will also assist those who may wish to remain hidden because they engage in illegal or criminal activities, including terrorists.
[18] The Canadian federal Department of Finance—Finance Canada (FC)—February 2018 discussion paper, "Reviewing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime",[19] was prepared in preparation for the FC's legislative Parliamentary Review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), which is the federal legal framework for regulating AML/ATF.
"[20] The resulting November 2018 Standing Committee on Finance report, recommended the creation of a "pan-Canadian beneficial ownership registry for all legal persons and entities, including trusts, who have significant control which is defined as those having at least 25% of total share ownership or voting rights" that would "include details such as names, addresses, dates of birth and nationalities of individuals with significant control".
"[21]: 1 The Innovation, Science and Economic Development Canada 13 February 2020 report, entitled "Strengthening Corporate Beneficial Ownership Transparency in Canada", said that the 2016 Panama Papers and Bahamas Leaks and the 2017 Paradise Papers highlighted the "scale and ease of use of corporations and other legal entities to evade or avoid taxes and facilitate criminal activities such as money laundering, terrorist financing, and corruption.
"[9] After international pressure to practice financial transparency increased, the UAE government announced the introduction of the Ultimate Beneficial Ownership or UBO law.
[22] Under the law, the UBO holding 25% of the company's ownership and voting rights at the firm with the permission to appoint or dismiss directors is reported in case of violation of rules.
Under the law, the UBO holding 25% of the company's ownership and voting rights at the firm with the permission to appoint or dismiss directors is reported in case of violation of rules.
[24][25] However, advocates question the success of introducing the new rule of reporting a company's UBO, as they don't consider it to be enough a parameter to monitor and curb money laundering in the UAE.
The United States defines beneficial ownership as the individuals who directly or indirectly own or control a legal entity, such as a corporation or LLC, and who benefit from its assets or income.
Under the CTA, certain corporations, LLCs, and similar entities are required to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
The CTA aims to prevent the misuse of anonymous shell companies for illicit activities by providing law enforcement and regulatory agencies with access to accurate and up-to-date beneficial ownership information.