As discussed in section 4.1 above, the UAE requires all financial institutions to identify the beneficial owners of a legal person customer by obtaining and verifying the identity of all individuals who, individually or jointly, have a controlling ownership interest in the legal person of 25% or more. Where no such individual meets this description, the LFI must identify and verify the identity of the individual holding the senior management position in the entity.

The AML-CFT Decision does not define “senior management position,” and LFIs should make a judgment, based on the specific facts and circumstances, as to the individual who meets this description. The senior management official should be a single individual with significant responsibility to control, manage, or direct a legal person customer. This may include the entity’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Director, General Partner, or President.

LFIs should consider whether the individual’s background, experience, and expertise make it plausible that they would indeed hold a position of responsibility at a legal person of the customer’s size. Where a customer identifies a relatively young or inexperienced individual as its senior manager, that may be a sign that the individual does not in fact control the customer and instead takes orders from another individual who wishes to obscure his or her identity.

For legal arrangement customers, LFIs must verify the identity of the settlor and the trustee (or anyone holding equivalent positions for non-trust legal arrangements), the beneficiaries or class of beneficiaries, and any other individuals in control of the legal arrangement.

The beneficial owner of a legal person or arrangement must be an individual. Another legal person or arrangement cannot be the beneficial owner of a customer, no matter what percentage it owns. LFIs must continue tracing ownership all the way up the ownership chain until it discovers all individuals who own or control at least 25% of the LFI’s customer.

When the LFI has identified qualifying beneficial owners, it should perform CDD on each individual beneficial owner, in accordance with the requirements of Article 8.1(a) of AML-CFT Decision. Where the customer is a UAE legal person, LFIs may require the customer provide the beneficial ownership report it has submitted to its company registrar as per Cabinet Decision (58). This should not be a substitute, however, for independent identification of beneficial owners by the LFI.

LFIs are also required to understand the customer’s ownership and control structure. This means that LFIs must be aware of who owns the customer, even if they have not verified the identity of the individuals owning every company in the customer’s ownership chain. LFIs should have confidence that they fully understand who has the power to direct and control their customer’s actions.