when a corporation or other legal entity opens a bank account the bank must identify the beneficial owners of that entity this is intended to prevent money laundering and tax evasion 
to prevent money laundering banks are required to verify the beneficial owners of the companies or legal entities that open an account for these purposes a beneficial owner is anyone with more than 25 ownership of a legal entity or anyone who controls the legal entity 3areas of beneficial ownershipeach type of asset has different rules for how beneficial ownership is recorded although these rules vary by jurisdiction these are some of the most common standards as mentioned in the example above publicly traded securities are often registered in the name of a broker for safety and convenience the securities and exchange commission sec recognizes this and has regulated the practice in private companies for a number of reasons a beneficial owner may not want their name as a shareholder of record so long as tax laws and other laws are complied with this practice is not illegal in itself in most countries real estate registries show the names of the owners of properties in some cases a beneficial owner may not want their name to appear on public records in such cases it is common for trustees or other entities to act as legal owners in place of the beneficial owner for example famous artists or politicians may not want their home addresses to be easily found in public records so they do not appear personally on title deeds wealthy individuals who are at risk of lawsuits or simply want to protect their assets and plan their estate generally use trusts to act as the legal owner of their property often securities and money while they and their families continue to be the beneficial owners here again this practice is legal but highly regulated in intellectual property law a beneficial owner is someone who benefits from a trademark patent or copyright even though the legal right belongs to someone else this may happen when the owner of an intellectual property assigns some of their rights to another party 4panama papersfamously in early 2016 the international consortium of investigative journalists made public what it called the panama papers these documents taken from the archives of the law firm mossack fonseca co show in detail the beneficial ownership of several thousands of offshore corporations 5while many were used legally it appears some beneficial ownership was hidden for nefarious or illegal motives the papers revealed the secret business activities and holdings of several public figures including british prime minister david cameron and icelandic prime minister sigmundur gunnlaugsson who resigned as a result it also shed light on the web of secret holdings by russian leader vladimir putin 6newer rules regarding beneficial ownerson may 5 2016 the financial crimes enforcement network fincen fortified and clarified due diligence requirements for banks brokers mutual funds and other financial entities most importantly the new rules require legal entity customers to identify and verify the identities of their beneficial owners when they open an account these rules took effect on may 11 2018 7regulatory requirements for beneficial ownership