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CS Professional · IFSCA - Regulations, Listing and Compliances · Book-keeping, Accounting, Taxation and Financial Crime Compliance Services and TAS

Meridian Fund Managers, an IFSC entity, is onboarding a company client owned through a chain of holding entities. Under customer due diligence expectations, what must Meridian do about the ownership structure?

Meridian must look through the chain of holding entities to identify the natural persons who ultimately own or control the client, and take reasonable steps to verify them. Recording only the parent or relying on a bare declaration does not satisfy beneficial ownership due diligence.

  1. ARecord only the name of the immediate parent company
  2. BIdentify the natural persons who ultimately own or control the client and take reasonable steps to verify themCorrect
  3. CSkip ownership checks because the client is a company
  4. DRely only on the client's self-declaration without verification

Explanation

Customer due diligence requires identifying the beneficial owner, meaning the natural persons who ultimately own or control the client, and taking reasonable steps to verify identity. Stopping at the immediate parent leaves the real controllers unknown. A bare self-declaration is not verification.

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