When a Passive Non-Financial Entity (NFE) uses CASP services, the controlling persons behind that entity must also be identified and potentially reported. This creates a "look-through" to the ultimate beneficial owners.

What Are Controlling Persons?

Controlling Persons are the natural persons who exercise control over an entity. The definition aligns with AML beneficial ownership requirements:

  • Individuals owning 25%+ of equity interest
  • Individuals controlling 25%+ of voting rights
  • Individuals exercising control through other means
  • Senior managing officials (if no other control identified)

Identification Requirements

For each controlling person, collect:

  • Full legal name
  • Date of birth
  • Residence address
  • Jurisdiction(s) of tax residence
  • TIN for each jurisdiction
  • Type of control exercised

Ownership Thresholds

Direct Ownership

Individual directly owns 25% or more of entity shares or capital.

Indirect Ownership

Individual controls 25% or more through a chain of ownership. Calculate by multiplying ownership percentages through the chain.

Control Without Ownership

Consider individuals with control through:

  • Shareholder agreements
  • Power of attorney
  • Board control
  • Veto rights
Ownership Calculation Example

If Person A owns 60% of Company X, and Company X owns 50% of Company Y (the user entity), Person A's indirect ownership of Company Y is 30% (60% x 50%), making them a controlling person.

Complex Structures

Multi-Layered Ownership

Trace ownership through multiple entities to identify ultimate controllers.

Trusts

Controlling persons of trusts include:

  • Settlor
  • Trustees
  • Protector
  • Beneficiaries (or class of beneficiaries)

Foundations

Similar approach to trusts—identify those with control over assets and decisions.

Reporting Requirements

For Passive NFEs with reportable controlling persons:

  • Report the entity's transactions
  • Report controlling person details
  • Include TINs for controlling persons
  • Specify relationship to entity
Key Point

If any controlling person is tax resident in a reportable jurisdiction, the entity becomes reportable even if the entity itself is not resident in a reportable jurisdiction.

Conclusion

Controlling person identification adds complexity to entity onboarding but is essential for Passive NFE compliance. Implement robust processes for tracing and documenting beneficial ownership.

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