Why you need to do it.
Under Section 11 of the the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, before beginning a business relationship with a customer, a reporting entity is required to perform client due diligence (CDD) on any beneficial owner of the customer.
Section 5 of the Act defines a beneficial owner as any individual who—
- has effective control of a customer or person on whose behalf a transaction is conducted; or
- owns a prescribed threshold [>25%] of the customer or person on whose behalf a transaction is conducted.
A beneficial owner can only be a natural person, not a company, trust, or other organisation. There may be more than one beneficial owner associated with your customer.
When performing CDD, reporting entities are therefore required to identify:
- any and all natural persons who own more than 25% of the customer's shares (where the customer is a company);
- any and all natural persons who have effective control of the customer; and
- any and all natural persons on behalf of whom the customer’s transactions are conducted.
The Department of Internal Affairs has useful guidance on how to identify beneficial owners. Read it here.
Recording benficial ownership in Connectworks.
In Connectworks, any person associated with a company or trust can be recorded as a beneficial owner.
To do this, select the action to edit the person's profile from within the trust or company for which they're a beneficial owner, and open the AML Compliance section:
Within the Beneficial Ownership / Control field, click the appropriate checkbox to indicate whether the person has effective control of the company, is a person on behalf of whom transactions of the company are conducted, or holds >25% of the company's shares. You can also add some supporting text. Once you're finished, click Update:
How the Nature of business relationship field interacts with our CDD workflow
The AML/CFT Act only requires reporting entities to perform CDD on all beneficial owners of your customers.
When it comes time to running the CDD workflow, anyone you've recorded as a beneficial owner will automatically be flagged as requiring CDD.
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