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Weekly term: beneficial owner

August 11, 2010

There are two types of owners in this world:  those who own it on paper, and those who really own it.  The “beneficial owner” is a fancy way of referring to the real owner.

The Financial Action Task Force, the foremost anti-money laundering international body, offered this definition of beneficial ownership in their publication, The Financial War on Terrorism:  A Guide*:

Beneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the person on whose behalf a transaction is being conducted.  It also incorporates those person who exercise ultimate effective control over a legal person or arrangement.

This is especially relevant within the context of jihadist financing because Saudi Arabia, Iran, their “charities,” their millionaires, and their terrorist groups use shell companies, front investors, puppet charities, correspondent banks, secret terror cells, and other cat’s-paw forces to buy assets in the West.  The hidden actor is the beneficial owner.

The Incorporation Transparency and Law Enforcement Assistance Act, a bill sponsored by Sen. Carl Levin, is still lingering around in the Senate.  Levin says that S. 569 would help expose beneficial ownership of, for example, Iranian-backed ventures.  In theory, that would be a good thing, but when you read the actual bill it’s actually just a law to help foreign countries crackdown on tax evasion by their own citizens doing business in America, and the bill’s “beneficial owner”… is Carl Levin…

*FATF, The Financial War on Terrorism:  A Guide (Paris:  OECD Publications Service, 1999).

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