Beneficial Ownership and Customer Risk Assessment
This domain tests beneficial ownership identification and customer risk assessment as linked processes. Korean AML rules require institutions to find the natural persons who ultimately own or control a customer, then use that information to set risk and monitoring intensity.
Core rules
- A beneficial owner is a natural person who ultimately owns or controls the customer, directly or indirectly. Korean practice generally uses a 25% ownership or voting-rights threshold for legal persons, plus control through other means.
- Where no natural person meets the threshold, identify the senior managing official or equivalent and document the rationale.
- Customer risk assessment should consider customer type, geography, product or service, delivery channel, transaction volume, and ownership complexity.
- Risk ratings drive CDD depth, approval levels, periodic review frequency, and monitoring thresholds.
- Keep beneficial ownership and risk assessment records current and retain them for the statutory period.
Worked example
A company has three shareholders: 40%, 30%, and 30%. All three meet the 25% threshold and must be identified and verified. If one shareholder is itself a company, the bank looks through it to natural persons. If a nominee shareholder appears, the bank must identify the person behind the nominee, not just the registered holder.
Traps
The legal owner is not automatically the beneficial owner. A 25% threshold is not a safe harbor for control exercised through agreements, family links, or senior management. A risk assessment that is completed once and never updated fails the ongoing-monitoring requirement.