Several strategies have been developed and implemented over time to curb this growing problem and prevent the misuse of these entities. One of these strategies has been identifying the ultimate beneficial owner – the natural person who ultimately owns, controls, and/or benefits from a juristic entity and the income it generates.
South Africa aimed to establish legislation to help combat money laundering activities, organised crime and terrorism through the Financial Intelligence Centre Act 38 of 2001 9 (FIC Act),
In the context of juristic entities, ownership and control must be distinguished from the notion of ultimate actual ownership and control. Section 21(B) of the FIC Act requires that the ownership and control structure be established for juristic entities. Reasonable steps also need to be taken to identify the beneficial owner/s:
While the above does complicate things when it comes to entering into transactions where a juristic entity is the seller or purchaser, one must be mindful of why certain documents are requested time and time again and remember that this process is a necessary step towards addressing issues around the misuse of juristic entities.
Written by Wessel de Kock