Ownership, control and the trust problem
Where a designated person's interest is held through a trust or a chain of overseas vehicles, the ownership and control analysis becomes materially harder. We look at the interaction between the OFSI guidance, the FATF Recommendation 25 standard on beneficial ownership of legal arrangements and the practical evidence firms can obtain in the time available on a live transaction — and where the honest answer is that the firm cannot proceed with the required level of assurance.
Why trusts are hard
A trust separates legal ownership from beneficial interest and can be structured to place effective control in the hands of a protector, a letter of wishes or a discretionary power. None of these appear in a standard corporate registry search.
The honest answer
Where the firm cannot obtain sufficient evidence within the transaction window, the correct decision is not to proceed. A file that records the enquiry and the reason for exit will defend the outcome; a file that records a conclusion without the underlying work will not.