What is a beneficial owner?
A beneficial owner is the natural person who ultimately owns or controls a legal entity, trust or account and enjoys its benefits, regardless of whose name appears on documents. The FATF (Recommendations 10, 24 and 25) requires countries to ensure this information is identified and accessible.
- Meaning
- Ultimate controlling natural person
- Contrast
- Legal or nominee owner
- Purpose
- Prevent money laundering, tax evasion, sanctions evasion
- Standard
- FATF R.10, 24, 25
Legal versus beneficial owner
| Aspect | Legal owner | Beneficial owner | |
|---|---|---|---|
| Who | Name on paper | Person with real money and control | |
| Examples | Nominee shareholder, 페이퍼컴퍼니 | shell company, trustee | The person behind them |
Korea’s three-step test
Under the Act on Reporting and Using Specified Financial Transaction Information, banks identify corporate beneficial owners as: (1) holders of 25% or more; (2) otherwise the largest shareholder or another person in de facto control; (3) failing that, the representative.
The question is not "whose name is it in?" but "who ultimately benefits?" Splitting stakes into 24% pieces does not hide the person who gives orders and collects the gains.
U.S. and Japan
| Country | Regime | Threshold |
|---|---|---|
| U.S. | Corporate Transparency Act (2021), FinCEN reporting | 25% ownership or substantial control |
| Japan | Act on Prevention of Transfer of Criminal Proceeds | Over one quarter of voting rights, etc. |
| Korea | Specified Financial Information Act | 25% → largest holder → representative |
A March 2025 FinCEN interim final rule exempted U.S. domestic companies from CTA reporting, focusing it on foreign reporting companies. Japan’s Legal Affairs Bureaus have run a beneficial-owner list system since 2022.
Why it matters
Hidden ownership enables laundering through shell companies, tax evasion and corruption; in company law it connects to veil piercing.
Frequently asked questions
- What if no one holds 25%?
- Identify the person with de facto control, or else the senior manager or representative.
- Does it apply to individuals?
- Yes, if the customer appears to act for someone else.
- Is CTA reporting still required?
- Since March 2025, generally only for foreign reporting companies.
References
- FATF. (2023). International standards on combating money laundering and the financing of terrorism & proliferation: The FATF Recommendations (Recommendations 10, 24, 25). Paris: FATF.
- 특정 금융거래정보의 보고 및 이용 등에 관한 법률 제5조의2 및 같은 법 시행령 제10조의5. 국가법령정보센터 https://www.law.go.kr/
- Corporate Transparency Act, 31 U.S.C. § 5336 (2021); FinCEN, Beneficial Ownership Information Reporting Requirement Revision and Deadline Extension, Interim Final Rule (March 2025).
- 犯罪による収益の移転防止に関する法律施行規則 第11条（実質的支配者）. e-Gov法令検索 https://laws.e-gov.go.jp/