How to Verify Beneficial Ownership for Corporate Clients

Introduction

When a regulated business onboards a corporate client — a corporation, partnership, trust, or other legal entity — it is not sufficient to verify only the identity of the person acting on behalf of the entity. FINTRAC requires reporting entities to identify the beneficial owners of the entity: the individuals who ultimately own or control the organization. Beneficial ownership verification is a critical component of KYC compliance and a key tool for preventing money laundering through complex corporate structures.

Key Points

1. Definition: A beneficial owner is generally any individual who directly or indirectly owns or controls 25% or more of a corporation, or who exercises significant influence over the entity’s operations or decision-making.

2. Why it matters: Shell companies, holding corporations, and nominee arrangements are frequently used to obscure the true ownership of assets and the source of funds. Identifying beneficial owners breaks through these layers of opacity.

3. FINTRAC expectations: Reporting entities must obtain the name, date of birth, and address of each beneficial owner and take reasonable steps to confirm the accuracy of this information. Relying solely on a public registry search is not sufficient — you must also obtain beneficial ownership information directly from the client.

4. Trusts and partnerships: Beneficial ownership requirements also apply to trusts (identifying trustees, beneficiaries, and settlors) and partnerships (identifying partners with significant ownership or control).

Step-by-Step Process

1. Request a beneficial ownership declaration: Ask the corporate client to provide a written declaration identifying all individuals who own or control 25% or more of the entity. Include a certification that the information is accurate and complete.

2. Verify the entity itself: Confirm the existence and legal status of the corporation by obtaining a certificate of incorporation, articles of incorporation, or equivalent document from the relevant corporate registry.

3. Identify and verify each beneficial owner: For each individual identified as a beneficial owner, collect their full legal name, date of birth, and address. Verify their identity using the same methods you would apply to an individual client — document verification and biometric matching.

4. Investigate complex structures: If the corporate client is owned by another corporation or trust, trace the ownership chain upward until you identify the natural persons who ultimately own or control the entity.

5. Document everything: Record the beneficial ownership structure, the documents reviewed, the verification methods used, and the date of verification. Store these records alongside the corporate client’s KYC file.

6. Monitor for changes: Corporate ownership structures can change. Establish a process for periodically asking corporate clients to confirm or update their beneficial ownership information.

How Athenty Can Help

Athenty, a verification intelligence company, provides Smart IDV and KYC services that simplify beneficial ownership verification for corporate clients.

1. Guided ownership collection: Smart KYC walks corporate clients through a structured beneficial ownership disclosure process, collecting the required information for each beneficial owner.

2. Individual verification of each owner: Each beneficial owner completes their own identity verification session — document authentication, biometric matching, and liveness detection — producing a separate, auditable verification report.

3. PEP and sanctions screening for owners: Every beneficial owner is automatically screened against PEP databases and sanctions lists, ensuring that the enhanced due diligence obligations triggered by PEP status are identified at the point of onboarding.

4. Consolidated compliance record: All beneficial ownership declarations, verification reports, and screening results are linked to the corporate client’s file, providing a complete audit trail.

Conclusion

Beneficial ownership verification is one of the most important — and most challenging — elements of KYC compliance for corporate clients. A structured process that combines client declarations with independent verification of each beneficial owner provides the strongest defence against the misuse of complex corporate structures. Athenty’s Smart KYC platform provides the tools to manage this process efficiently, consistently, and with full documentation.