A beneficial owner is the natural person who has the ultimate control over, and thus benefits from, a security, an asset, or a property, even though the legal title or official record of ownership may be in another entity's name. This other entity could be a company, a trust, or a nominee, acting on behalf of the beneficial owner.
The concept of beneficial ownership is especially important in situations where the assets are held in some form of a trust structure or through nominees. For instance, within a trust structure, while the trustees are the legal owners of the assets, they are responsible for administering and overseeing these assets to serve the interest of the beneficial owners, or beneficiaries. The beneficiaries, in turn, are entitled to the advantages or benefits derived from these assets.
The term “beneficial owner” is also significant in the regulatory context, particularly in relation to anti-money laundering (AML) and counter-terrorism financing (CTF) requirements. It is also central to international tax transparency regimes such as FATCA and the OECD’s Common Reporting Standard (CRS).
CRS is the non-U.S. counterpart to FATCA and enables the automatic exchange of financial account information between tax authorities. More than 100 jurisdictions currently participate in CRS.
This challenge is described by Blockwall, a venture capital firm investing in blockchain and Web3 infrastructure with an LP base spanning multiple jurisdictions. In an interview focused on FATCA and CRS reporting obligations, the team explains that their investors range from high-net-worth individuals to institutional entities structured through holding companies and investment vehicles across different countries. As a result, regulatory reporting requires not only identifying the investing entity, but also determining the natural persons who ultimately control or benefit from those entities.
Dominic Briggs, Co-Founder and General Partner at Blockwall, highlights the importance of good partnerships in managing these challenges: “Reliable partners on the admin side are indispensable in this process. They bring expertise and resources that help us streamline compliance tasks, mitigate risks, and ensure we stay ahead of regulatory changes. Their support allows us to focus on our core activities, such as managing investments and maintaining strong relationships with our LPs.”
Fund administration platforms help fund managers track beneficial ownership information through automated compliance workflows. This is particularly important during investor onboarding, where fund managers must collect KYC documentation and beneficial ownership declarations before accepting capital. Proper fund accounting systems maintain records of beneficial owners alongside legal entity structures, ensuring regulatory reporting accuracy across multiple jurisdictions.
