When a person opens an account, you can look at their face, their documents and their date of birth. A company offers none of that. It acts through people, and it can sit at the bottom of a stack of other companies, trusts and nominees. The question that matters is not what the company is called, but who stands behind it.

Why the question keeps coming back

Businesses are useful to criminals for the same reason they are useful to everyone else: they separate the owner from the asset. That separation is legitimate. It is also the easiest way to hide who really controls money.

The case studies are consistent. The World Bank and UNODC's The Puppet Masters (2011) looked at 150 grand corruption cases and found that most of them used companies, trusts, foundations or similar structures to conceal who owned the assets. Companies alone appeared in 128 of the 150. A 2018 study by the FATF and the Egmont Group, covering 106 cases, found shell companies at the heart of schemes to disguise ownership, often working alongside nominees and professional intermediaries.

So the FATF standards do not stop at the company itself. Under Recommendation 10, a firm must identify and verify a business customer, understand how it is owned and controlled, and identify its beneficial owners, taking reasonable measures to verify who they are.

The rule that changes how you look

The most useful sentence in this area is short: a beneficial owner is always a natural person. It is the human being who ultimately owns or controls the customer, or on whose behalf it acts.

That one rule changes the work. A parent company is never the answer. A trust is never the answer. A nominee is never the answer. Each is a layer to look through, and the tracing stops only when it reaches people.

Ownership is also wider than shareholding. Follow the shares through each parent, but look at voting rights too, and at control by other means, such as a right to appoint or remove the board. Someone with no shares at all can still be the person in charge.

Tracing beneficial ownership: from the business customer, through a parent company, a nominee and a trust, until the chain reaches a natural person who is the beneficial owner. FOLLOW EVERY LAYER The customeropens the account Parent companyshares · votes Nomineeholds for another Trustsettlor · trustees Natural personthe beneficial owner THE TRAIL ENDS ONLY WHEN IT REACHES A HUMAN BEING
Companies, nominees and trusts are layers to look through. None of them can be the beneficial owner.

Where the trail goes cold

Trusts have no single owner. You cannot point at one shareholder. The FATF standards expect each role to be identified: the settlor, the trustee or trustees, the beneficiaries or class of beneficiaries, any protector, and anyone else who has ultimate effective control. A file that names only the trustees is incomplete.

Nominees are built to stand in front. A nominee shareholder or director holds the position for someone else. That is not always unlawful, but it is a familiar way to keep the real owner out of sight. The question to ask is simple: who is the nominator? A practical warning sign is the same handful of people appearing as directors or signatories of many unrelated companies.

Registers record what was declared. Many countries now keep central registers of beneficial owners, and they are a real help. But a register shows what the company told the registrar, not what is true. Treat it as one input. Compare it with what your own checks found, and where the two disagree, find out why. The FATF standards see the reporting of such discrepancies as one way countries can keep registers accurate. If a gap looks like concealment rather than a clerical slip, consider whether a suspicious transaction report is needed.

Sometimes no owner can be found. If, after reasonable effort, no natural person can be identified as owner or controller, the fallback is to record the person who holds the position of senior managing official, and to record why no owner was identified. That is a recorded fallback, not a pass. A chain that nobody can or will explain is itself a reason for enhanced due diligence, or for declining the relationship.

A register tells you what a company chose to declare. Your own checks tell you whether to believe it.

Owners are only half the picture

Knowing who owns a business tells you little unless you also know what it does. Four things belong in every business file:

  • Nature and purpose: the sector, the products, the main customers and suppliers, and the countries it trades with.
  • Expected activity: the volumes, values and types of transaction that would be normal. This becomes the baseline for monitoring.
  • Source of funds for the relationship and, for higher-risk customers, the source of wealth of the beneficial owners.
  • A risk rating that combines ownership, sector, countries and products, and sets how deep the checks go and how often they are repeated.

Each beneficial owner should also be screened against sanctions and politically exposed persons lists, in the same way as the directors.

Then the picture has to stay current. Businesses change faster than people. Shares are sold, boards change, activities move into new sectors and new countries. Periodic reviews matter, more often for higher-risk customers, but so do trigger events: a new owner, director or signatory; activity that does not fit the profile; adverse media; a sanctions or PEP match on anyone connected.

Questions for a compliance team

Five questions show whether your beneficial ownership checks would hold up:

  1. Does every business file end with named people, or do some stop at a company or a trust?
  2. Do we look at control as well as shares, including the right to appoint or remove the board?
  3. For trusts, have we identified every role, not only the trustees?
  4. When the register and our findings differ, what happens: do we ask, record and, where needed, report?
  5. When we fall back on a senior managing official, is the reason recorded, and does it lead to closer scrutiny?

Done well, this work protects both sides. It keeps people with something to hide out of the system, and it lets genuine businesses open accounts and trade without being treated as suspects.

In Kenya, companies and limited liability partnerships must keep a register of their beneficial owners and lodge it with the Registrar. For companies, a person is a beneficial owner if, among other tests, they hold at least 10% of the shares or voting rights, or can appoint or remove a majority of the board; that test sets what the company must record, and your own due diligence rules may require you to look further. Nominee shareholders and directors must disclose their status and their nominator to the company. The Trust Administration Act, 2026, in force since 25 September 2026, requires trusts within the Act to lodge a beneficial ownership register with the Registrar of Trusts; existing trusts have 24 months, and the regulations on what the register must contain had not been published as at October 2026. Records must be kept for at least seven years.

Our free course Know Your Business (KYB) and Beneficial Ownership covers confirming a business exists, who can act for it, tracing owners and keeping the picture current, with a knowledge check and a certificate.

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