Initial beneficial ownership checks for company clients
When a private company applies to become a client, the accountancy firm must establish which individuals ultimately own or control it.
Their identities must be checked, and the AML file must show why the practice was satisfied with the ownership position before accepting the engagement.
The depth of the work should reflect the complexity of the company’s ownership structure and the reliability of the information available.
Key takeaways
- The ownership analysis should trace corporate shareholders until the individuals with ultimate ownership or control have been identified.
- The client-level CDD work needs to address indirect interests and control rights as well as direct shareholdings.
- Verification of each beneficial owner must be based on reliable, independent evidence appropriate to the risk.
- Companies House and PSC information is relevant as a cross-check against the client’s account, rather than as a substitute for enquiry.
- Material differences need to be resolved before a decision is made on whether the company can be accepted as a client.
- The AML file should record the ownership conclusion, supporting evidence, and reasons for the acceptance decision.
What firms need to establish before client acceptance
Before acceptance, the ownership and control information should be coherent enough to support a reasoned conclusion about who the beneficial owners are.
The intended nature and purpose of the engagement also needs to make sense in that context, although this is only one part of the wider customer due diligence (CDD) process.
A separate timing point is that CDD will normally be completed before the client relationship begins.
Although verification might take place while the relationship is being established, this should only be the case when the money laundering risk is low, and delaying it is necessary to avoid interrupting normal business.
Because the exception is narrow, pressure to start work quickly cannot, by itself, make that exception routine.
Identifying a company’s beneficial owners
A beneficial owner is ultimately a natural person. When the shareholder is another company, the enquiry continues through that company and any further layers until the individuals at the end of the chain are understood.
One principal test captures anyone with direct or indirect ownership or control of more than 25% of the company’s shares or voting rights. A holding of exactly 25% falls outside this numerical test.
Importantly, this means that indirect percentages need to be understood. For example, if an individual owns 60% of a holding company that owns 50% of the client, the individual’s indirect interest is 30%.
The percentage calculation is not the end of the enquiry, however, because voting arrangements, contractual rights, or other powers may confer control even if the ownership threshold is not met.
The same caution applies when using the persons with significant control (PSC) register. While relevant, the register is not a definitive list of beneficial owners for anti-money laundering purposes.
Practical takeaway: PSC status and AML beneficial ownership overlap, but they do not always produce the same conclusion. As a result, a corporate entity shown in the chain is an intermediate step in the enquiry rather than a conclusive answer.
Baseline ownership information for company client onboarding
Accountancy firms need sufficient information to show direct and indirect ownership through to the ultimate individuals. Depending on the structure, useful evidence can include ownership records and governing documents that explain voting or shareholder rights.
The documented ownership position, including any control rights, must be consistent with the client’s explanation.
In particular, the AML file should demonstrate that an intermediary providing instructions has authority to act. Similarly, structures or rights that obscure control call for focused questions and supporting evidence.
In those cases, complexity does not automatically indicate wrongdoing, although it increases the need for a clear explanation.
The evidence should be tailored to the structure and risks rather than based on the same document pack for every client.
Company and beneficial owner identity verification
Verification should cover the company’s core corporate particulars, including its registered identity and legal basis. Constitutional information might also be needed to understand control.
Each beneficial owner’s identity must be checked through a reliable process that uses independent evidence and is appropriate to the risk. Recording only a name supplied by the client gives no reasonable basis for concluding that the individual is who they claim to be.
In addition, verification is still required for a simple company whose owner also runs the business. A complex or overseas structure could require more evidence if ownership or control is difficult to establish or if the available information conflicts.
Register cross-checks and professional judgement
For a UK company, the client’s evidence should be compared with the relevant Companies House and PSC records as an independent cross-check.
Companies House identity verification serves a different legal purpose and operates to a separate standard. Completion of that process by a director or person with significant control leaves the accountancy practice’s AML duties unchanged.
Practical takeaway: If the register and client information differ, the reason should be investigated instead of accepting either version automatically.
Resolving unclear or inconsistent ownership information
A statement that the company has no person with significant control does not complete the beneficial ownership enquiry, since control may still exist under the Money Laundering Regulations.
Treating the senior person responsible for managing the company as the relevant person is a last-resort fallback.
This approach is available only when all reasonable steps to identify the actual beneficial owner have not produced a satisfactory result, and there are no grounds for suspicion. The AML file should explain why this approach was necessary and how that individual was verified.
If the required CDD cannot be completed, the practice must consider whether the relationship can begin, including when the prospective client refuses adequate ownership information.
Any inconsistency creating suspicion should be handled through the firm’s internal suspicious activity reporting process.
Separately, a material discrepancy between information gathered for CDD and the Companies House register might also have to be reported under Regulation 30A.
Because minor clerical differences are treated differently, the discrepancy assessment should be documented, and current Companies House guidance should inform whether the statutory reporting conditions are met.
Documented onboarding conclusion and ownership baseline
The client AML file should document the practice’s beneficial ownership determination, showing the structure relied on and why each identified individual qualified. It also needs to identify the evidence used to verify the company and those individuals.
Moreover, the AML file should set out how material issues were resolved and the outcome of any escalation or reporting process, with the level of verification linked to the assessed risk so that the file supports the practice’s decision to accept the client.
That established position becomes the reference point for assessing later ownership and control changes.
In summary
Defensible onboarding work leaves a clear account of who owns or controls the company. Evidence should suit the structure, which means any uncertainty should be resolved by targeted enquiry rather than assumptions.
A well-supported conclusion underpins a sound client acceptance decision and gives the practice a reliable starting point for ongoing monitoring and recognising future changes to that position.
FAQs
Start with the company listed as the shareholder and work through any holding entities behind it. Ask for records that explain shareholdings, voting rights, or other control arrangements where needed. The AML file should make the route to the final individuals clear enough for later review.
An exact 25% holding falls outside the article’s ownership threshold because the test applies only when shares or voting rights exceed 25%. The firm should still consider whether that person controls the company in another way. For example, control can instead arise from voting agreements, contractual provisions, or another source of authority, even if the percentage test is not met.
No. The PSC register is a useful comparison point, but it does not remove the need for the firm to understand the ownership and control position for AML purposes. If the register shows another corporate entity, the firm still needs to understand who sits behind that entity before reaching its onboarding conclusion.
The evidence should match the company’s ownership structure and level of risk. For a straightforward owner-managed company, clear ownership records and reliable identity evidence are often sufficient. A layered, overseas, or unusual structure can necessitate further documents explaining who holds the shares, how voting rights operate, and whether any individual has control through other arrangements.
The usual rule is to complete customer due diligence before beginning the client relationship. The limited exception applies only to a low-risk case in which waiting would interrupt normal business. Commercial pressure or a request for urgent work cannot alone justify postponing the checks.
The firm should ask why the information differs, obtain supporting evidence where needed, and decide which version reflects the current position before accepting the client. If the mismatch is material, Regulation 30A reporting may need to be considered. Minor clerical differences should be handled in line with current Companies House guidance.
References and Source Material
- HMRC, Risks common to accountancy service providers
- Money Laundering Regulations 2017 (Regulations 5, 28, 30, 30A, and 31)
- CCAB, Anti-Money Laundering, Counter-Terrorist and Counter-Proliferation Financing Guidance for the Accountancy Sector
- HMRC, Your responsibilities under money laundering supervision
- Companies House, People with significant control: guidance on the regime for legal entities
- Department for Business and Trade, People with significant control: 2026 company statutory guidance
- Companies House, Report a discrepancy about a PSC or registrable beneficial owner
- Companies House, Tell Companies House you have verified someone’s identity
