The Financial Intelligence Analysis Unit (FIAU) published guidance on how beneficial ownership is to be determined where shares in a legal person are jointly owned but only one co-owner is registered as holder. The FIAU issued the guidance following a number of queries on the matter, with the aim of ensuring a consistent approach across subject persons.
The guidance supplements Chapter 4 of the Implementing Procedures – Part I. It is of particular relevance to shareholdings acquired by spouses under the community of acquests, and to shares inherited by co-heirs on the death of the original holder.
Registered Holder as the Starting Point
Shares or other ownership interests in a legal person may be jointly owned by two or more persons. However, in terms of applicable laws, only one such owner may result and be visible from the official records of any such legal person, with no other indication that there may be someone else owning the said shares or interest. As far as the legal person is concerned, the registered holder is its sole shareholder.
As a general rule, only the registered holder is therefore to be considered for beneficial ownership purposes, provided that:
- Only one of the co-owners results from the records of the legal person and, in so far as the legal person is concerned, is deemed to be the only member of the legal person;
- There are no heightened ML/TF risks; and
- The unregistered co-owners are not otherwise involved in the affairs of the legal person.
The FIAU confirms that subject persons are not expected to ask customers whether shares are co-owned.
Control via Other Means
An unregistered co-owner is still a beneficial owner where he or she exercises control over the legal person through other means. The FIAU gives the example of a spouse with whom all major management decisions must be discussed in advance.
The FIAU also reminds subject persons that the general rule is subject to a risk-based assessment, and that a one-size-fits-all approach should be avoided. While unregistered co-owners will in most cases have no involvement in the legal person, co-ownership may be used to conceal the true beneficial owner. Examples include assets placed in a spouse’s name to protect them from seizure, confiscation, sanctions designation or creditors. Subject persons are expected to remain attentive to these indicators both at the start of the business relationship and as it progresses. A transfer of shares made close to enforcement action, or to reports of an investigation, calls for an assessment of whether the change in beneficial ownership is genuine or whether the previous owner remains involved.
Queries on the guidance may be addressed to the FIAU at queries@fiaumalta.org.
Get in touch with our team if you require assistance in reviewing beneficial ownership procedures in light of FIAU guidance.
