Q&As

Do we have to conduct client due diligence on all shareholders of corporate clients?

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Published on LexisPSL on 26/04/2018

The following Practice Compliance Q&A provides comprehensive and up to date legal information covering:

  • Do we have to conduct client due diligence on all shareholders of corporate clients?
  • Identify the company
  • Identify the beneficial owners

Do we have to conduct client due diligence on all shareholders of corporate clients?

Client due diligence (CDD) entails:

  1. identifying the client

  2. verifying that identity, and

  3. assessing, and where appropriate obtaining information on, the purpose and intended nature of the business relationship or occasional transaction

You must determine the extent of your CDD measures and ongoing monitoring on a risk-sensitive basis, depending on the type of client, business relationship and matter.

You are not required, as a matter of course, to identify and verify the identity of every shareholder of a corporate client.

The measures you take to do this will depend on factors including the type of company (eg private company, unlisted public company, public company listed on a regulated market), the country of its incorporation (eg UK or overseas), as well as your risk assessment.

Identify the company

See Practice Note: Money Laundering Regulations 2017—CDD quick reference guide—Partnerships, LLPs and companies, which summarises suggested CDD measures for different types of companies.

Identify the beneficial owners

Regulation 5 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692 (MLR 2017) defines a beneficial owner of a company (body corporate) which is not listed on a regulated market as any individual who:

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