The Regulated Entities (RE) like banks required to follow certain customer identification procedures while undertaking a transaction either by establishing an account-based relationship or otherwise and monitor their transactions. This is to adhere the rules and regulations in terms of Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005. In the cases of a company or in a partnership firm or in unincorporated association or body of individuals, the beneficial owner is identified by the regulated entities which are explained below.
In a company, the beneficial owner is the natural person(s) who either acts alone or through one or more juridical persons, has/have a controlling ownership interest or who exercise control through other means. Here controlling ownership interest implies the person(s) who has/have ownership of/entitlement to more than 25 per cent of the shares or capital or profits of the company. In this context, “Control” means the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements.
In case, the customer is a partnership firm, the beneficial owner(s) is the natural person(s) who either acts alone or through one or more juridical persons, has/have a controlling ownership interest or who exercise control through other means. Here controlling ownership interest implies the person(s) who has/have ownership of/entitlement to more than 15 per cent of the shares or capital or profits of the partnership.
In case, the customer is a an unincorporated association or body of individuals, the beneficial owner(s) is the natural person(s) who either acts alone or through one or more juridical persons, has/have a controlling ownership interest or who exercise control through other means. Here controlling ownership interest implies the person(s) who has/have ownership of/entitlement to more than 15 per cent of the property or capital or profits of the unincorporated association or body of individuals. But, Body of individuals (BOI) means a conglomeration of individuals who carry on some activity with the objective of earning some income. Therefore, Body of individuals would consist only of individuals and no juridical persons allied with it.
Where no natural person is identified under the above three definitions, the beneficial owner is the relevant natural person who holds the position of senior managing official.
