Global Spotlight on KYC Beneficial Ownership

29 March 2017


The clock is ticking as banks around the world need to comply with beneficial ownership rules required by new Know Your Customer (KYC) regulations. These changes will create challenges for years to come. To help you on this journey, we offer this series of three blog articles providing practical guidance on new requirements and highlighting key challenges. This first article focuses on the global impacts of the new regulations.

There is good reason beneficial ownership (people who own or control a legal entity) is in regulatory crosshairs. Recent fines, penalties and regulatory reviews demonstrate that compliance programs are failing to prevent bad actors from using legal entities to mask unlawful activities.

The Panama Papers incident is a good example. Financial firms around the world were rocked when Panamanian law firm Mossack Fonseca leaked 11.5 million documents from 215,000 offshore entities. Many of those documents provided evidence of regulatory violations such as money laundering and tax evasion. One of the first related banking casualties was Taiwan’s Mega International Commercial Bank (Mega Bank). An investigation found many Mega Bank legal entity customers were formed with assistance from Mossack and Fonseca. Ultimately, regulators imposed a US$180m fine for anti-money laundering failures.

International Standards

To further reduce abuses of the global financial system, regulators around the world are advancing new and evolving laws mandating the collection, maintenance and reporting of beneficial ownership information. This global trend has gained momentum since the Financial Action Task Force (FATF) issued the first international standards on beneficial ownership in 2003. More recently, the FATF issued “FATF Report to the G20: Beneficial Ownership.” You would be wise to revisit the following areas of your compliance program highlighted in the report where banks struggle to meet expectations:

  1. Insufficient accuracy and accessibility of basic information relating to company registration
  2. Obstacles to information sharing, such as data protection and privacy laws that impede competent authorities from getting timely access to adequate, accurate and up-to-date basic and beneficial ownership information
  3. Less-rigorous implementation of customer due diligence (CDD) measures by key gatekeepers such as company formation agents, lawyers and trust-and-company-service providers

National regulations

Countries are quickly codifying FATF standards into national laws, each with their own local nuances, providing a short window to comply. Like many, you may find yourself struggling to meet compliance deadlines. If so, be sure to have a well-documented roadmap to compliance with a definitive completion date. Examples of national regulations include:

European Union

The European Union Fourth Anti-Money Laundering Directive is driving regulatory change in Europe. With a two-year window for implementation, all EU member states must be compliant with the new mandates by June 26, 2017.

United States

The Customer Due Diligence Requirements for Financial Institutions was issued by the Financial Crimes Enforcement Network (FinCEN) after much anticipation. The final rule requires adoption of due diligence procedures to identify and verify a legal entity customer's beneficial owner(s). Financial institutions must be compliant with the rule by May 11, 2018.


The Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, released by the Federal Attorney-General’s Department, is the most sweeping review performed since inception of AML/CTF legislation. Accompanying the report is a draft project plan, “Implementation of the recommendations from the statutory review of the anti-money laundering and counter-terrorism financing regime.” The plan includes a variety of deliverables with target dates through 2019.

Time to act is now!

Such laws are almost certain to increase banks’ regulatory risk profiles as risk and compliance teams struggle to establish and/or maintain beneficial ownership programs. Time is growing short for your organization to meet its KYC obligations. For information on how Intralinks® can accelerate compliance, please visit Intralinks for Regulatory Risk Management.

Read our white paper Beneficial Ownership? Not If You’re A Bank!


Todd Partridge

Todd Partridge

Todd Partridge is Vice President, Product Marketing at Intralinks. He has broad industry experience in the enterprise information management (EIM) space, with deep expertise in all trends and technologies related to information governance, enterprise content management, document management, web content management, business intelligence, team collaboration, e-mail management, and enterprise records management practices. In his previous role at OpenText, Todd held several global positions ranging from sales, marketing, product management, positioning and strategy.

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