Identification of the beneficial owner

It is essentially the case that the contracting party is the subject of the GwG due diligence obligations. However, if the contracting party is not actually the beneficial owner of the assets which are the subject of a financial transaction, then is necessary to ensure that the beneficial owner is identified. This is in order to prevent abuse or the use of front men to dodge identification.

For this purpose the GwG obliges a financial intermediary, under certain circumstances, to obtain a written declaration from the contracting party stating who the beneficial owner is.

This obligation is established if:

  • the contracting party is not identical to the beneficial owner, or if doubts exist;
  • the contracting party is a domiciliary company;
  • a cash transaction of substantial value is performed.

In the case of collective accounts or collective securities accounts, the obligation to ascertain the beneficial owner means (cf. Art. 5 Para. 2 GwG) that the financial intermediary must obtain from the contracting party a complete list of the beneficial owners. In addition, it is also important to ensure that the contracting party reports every change to the list.

Definition of domiciliary company

Pursuant to Art. 6 Para. 2 VBF, a domiciliary company is a legal entity, corporation, establishment, foundation, trust, trust company or similar entity which does not engage in any trading, manufacturing or other business activity of a commercial nature.