Beneficial Owner Configuration Guide

Different countries have different legislation, and different obliged entities within the same country may choose to implement national legislation in different ways.

T-rank has a highly customizable approach to defining beneficial ownership. You may choose among several models; models can be combined and thresholds adjusted. You may even specify a cascading approach where model combinations are tried one by one until beneficial owners are identified.

For a more thorough review of T-rank's recommendations regarding the choice of calculation methods, see our white paper.

Models

Integrated ownership (integrated)

Integrated ownership is sometimes referred to as Effective ownership, Indirect ownership or Cash rights. It is the sum of any direct shareholding and indirect shareholdings an entity has in another, also taking any circular ownership into account.

Beneficial owners are most commonly defined as the natural persons who ultimately own or control a customer. In T-rank's opinion, integrated ownership is the best way to measure the own part of this definition.

When calling the /v2/beneficial endpoint, this model is specified by the name integrated. The corresponding threshold is specified in the threshold_integrated parameter. Typical values are 25 (at least 25%) and >25 (more than 25%).

AMLR reference: This models covers half of Article 52.

Integrated voting rights (integrated-vr)

Integrated-vr is calculated in the same way as integrated ownership, only that share of voting rights rather than share of shares (capital) is used as input.

In T-rank's opinion, applying the integrated ownership calculation principle on voting rights make little sense. If you are a 30% minority shareholder in a company owning 90% of the voting rights in a customer, you have no formal influence on decisions in the customer. If you own 90% of the voting rights in a company owning 30% of the voting rights in the customer, where the remaining voting rights in the customer is scattered among a high number of independant shareholders, you have next to control over the customer. The integrated voting rights is 27% in both examples.

When calling the /v2/beneficial endpoint, this model is specified by the name integrated-vr. The corresponding threshold is specified in the threshold_integrated_vr parameter. Typical values are 25 (at least 25%) and >25 (more than 25%).

For data sets where there is no distinction between ownership and voting rights, this model makes no sense and is unavailable.

AMLR reference: This models covers the other half of Article 52.

Voting Power (vp)

Voting Power is a (indirect) shareholders ability to influence the outcome of a vote at a general assembly. A shareholder with 100% voting power has complete control (is a majority shareholder). A shareholder with 50% voting power will be in a position to change the outcome of a vote in 50% of all possible voting combinations among the shareholders.

T-rank considers voting power to be the best way of defining Beneficial Ownership by means of influence in a company (the control part of the beneficial ownership definition).

When calling the /v2/beneficial endpoint, this model is specified by the name vp. The corresponding threshold is specified in the threshold_vp parameter. The default and recommended value for threshold_vp is 49.8.

AMLR reference: Article 53. A threshold of 100% will limit to traditional control, a threshold close to 100% will include de facto control as defined in i.e. IFRS10. T-rank would argue that owners with voting power above 49.8% should be included due to their influence, and that this would be a more relevant model than integrated-vr.

Ownership at Each Level (simcon)

This is a model used in some national legislations, stating that if there is more than a certain threshold of ownership or voting rights on each level between a natural person and a customer, the person should be considered a beneficial owner.

Clearly, if a person has some ownership in a company through a chain of minority shareholdings, that person will have no influence in the company, and the cash rights will become marginal. This is not a model recommended by T-rank.

The T-rank implementation of this model is a top-down recursive implementation. If a person has more than the threshold ownership in two companies, and these companies in sum have more than the threshold percent ownership in a third company, the person will be said to satisfy the model for the third company as well. We also adjust direct ownership for any circular self ownership not induced by the owner in question in the owned entity. For versions where we have both ownership and voting rights data, having more than the threshold percent of either voting rights or equity shares on each level will be sufficient.

When calling the /v2/beneficial endpoint, this model is specified by the name simcon. The corresponding threshold is specified in the threshold_simcon parameter. Only predefined values are supported for threshold_simcon - see API sprecification for specifics.

AMLR reference: This model has no relevance for AMLR. For datasets where there is no distinction between voting rights and ownership, simcon with threshold >50% can be used for determining traditional control (Article 53).

Control (control)

A person controlling a company becomes Beneficial Owner.

Control is defined by means of Voting Power, and how much voting power is needed for control may be specified in threshold_control and defaults to 99.9.

AMLR reference: This model covers Article 53.

Control of Ownership (control+ownership)

If a person - directly and through companies he/she controls, controls more than the threshold percent of the shares or voting rights in the target company, he/she is a beneficial owner.

When calling the /v2/beneficial endpoint, this model is specified by the name control+ownership. The threshold for the share of voting rights that must be controlled is specified in threshold_control_vr, the share of the capital (shares) in threshold_control_capital. Control is defined by means of voting power, and applies the same threshold as the control model (threshold_control).

AMLR reference: This model covers half of Article 54.

Ownership in mother (ownership+control)

In order for this model to yield any results, it must be combined with the model(s) integrated and/or integrated-vr. Which of these two models are active, and with what thresholds, determines the ownership part of this model definition. The control part is resolved using Voting Power, with the same threshold for control as the controlmodel (threshold_control). A person becomes beneficial owner in a customer if the person 1) has sufficient ownership in a single company to become beneficial owner in this company, and 2) this company controls the customer.

When calling the /v2/beneficial endpoint, this model is specified by the name ownership+control. threshold_integrated and threshold_integrated_vr are relevant for determining ownership, threshold_control for determining control.

AMLR reference: This model covers the second half of Article 54.

Beneficial Owner Registers (bo-register)

Note: Only supported in the Tieto version.

When a person is registered as a beneficial owner in a national register, that person becomes beneficial owner.

In order to gain access to the Danish and Finnish BO registers, you must be an obliged entity. In order to gain access to the Norwegian BO register, you must have applied for and been given access to the register through The Brønnøysund Register Centre. You must also delegate this access to T-rank and notify T-rank about the delegation.

When calling the /v2/beneficial endpoint, this model is specified by the name bo-register. If you also submit the parameter include_combine_reg=true, BO registers and any other models you have specified will be chained.

Norwegian Beneficial Owner Register Definition (ge50c-gt25)

Note: Only supported in the Tieto version.

This model mimics the definition set forth in the Norwegian Beneficial Owner Register legislation. If a person - directly and through companies he/she controls - holds more than 25% of the shares or voting rights in the target company, he/she becomes a beneficial owner. Control is defined as having at least 50% of the voting rights at every step of the control chain.

When calling the /v2/beneficial endpoint, this model is specified by the name ge50c-gt25.

Role (role)

Note: Only supported in the Tieto version.

A person having one of specified roles in the entity will be regarded as a beneficial owner. Note that this model is always active for foundations and trusts, regardless of which models you specify. Thus, this model is usually only specified as a fallback model when using a cascading approach.

When calling the /v2/beneficial endpoint, this model is specified by the name role. The parameter bo_roles can be used to specify a comma-separated list of roles that will trigger beneficial ownership.

Combining Models

The model parameter in /v2/beneficial may contain a comma-separated list of models, meaning that a person will become a beneficial owner if he/she satisfies at least one of the listed models.

Cascading Approach

Cascading approach means that the system should first try to find beneficial owners using one set of models. If none is found, try another set of models, and so on.

In v2/beneficial, a cascading approach is specified by separating each step in the sequence with colons.

Example:

model=vp,integrated:bo-register:role

First, check if there are any beneficial owners by applying the Integrated ownership and Voting Power models. If none are found, look in national beneficial owner registers. If still none are found, return the CEO and Board of Directors.

Family Relations

Note: Only supported in the Tieto version and for people registered in the Norwegian Population Register. In order for this to work, the calling party must have extended access to the Norwegian Population Register, and must have delegated these rights to Tieto.

When turned on, the owners of the company will be checked against the population register to determine whether they are close family according to the Norwegian AML legislation, If they are, they will be treated as a single unit when checking any of the models integrated, vp, control, ownership+control and simcon. Note that for the control model, simcon with threshold >50% is used for determining control by families. When a set of close family members are found to satisfy a model, all members (who have ownership in the company) will be returned as beneficial owners.