The shareholder is a company, the owner is a trust
A corporate onboarding team receives an application from Zayn Logistics (Pvt) Ltd, a Pakistani freight forwarder. Its submitted constitution shows 60% of shares held by Falcon Holdings Ltd, a company registered in a UAE free zone, and 40% held by three Pakistani individuals, each with 13.33%. Falcon's own share register shows its shares are held by a Jersey discretionary trust; the trustee is a corporate services provider, and the trust deed names a class of beneficiaries rather than named individuals. The sole director and authorized signatory of Zayn Logistics is a Pakistani consultant who says he acts on instructions from the trustee. Expected monthly turnover is PKR 500 million, with receipts from unrelated parties in four countries. The relationship manager wants to open the account remotely and rely on the documents already provided. The bank's policy sets a 25% beneficial ownership threshold but is silent on trusts and nominee arrangements.
1. Determine who the beneficial owners of Zayn Logistics are, or explain why they cannot yet be determined, and identify the documents and checks needed.
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The analysis must look through both the Pakistani company and the UAE company. At Zayn Logistics level, Falcon Holdings holds 60%, so Falcon is a controlling shareholder and its ownership must be traced. The three Pakistani individuals each hold 13.33%, below the 25% threshold, so they are not automatically beneficial owners by shareholding alone; however, the bank should check for shareholder agreements, powers of attorney or other control arrangements that could make one or more of them controlling persons. At Falcon level, the shares are held by a Jersey discretionary trust. For a trust, the beneficial owners are generally the settlor, the trustee, the protector if any, and the beneficiaries or class of beneficiaries. Because the trust is discretionary and names a class rather than individuals, the bank must obtain the trust deed, the names and identities of the settlor and trustee, any protector, and the class of beneficiaries. If no individual beneficiary can be identified as a beneficial owner, the bank should identify the trustee or the person exercising ultimate effective control. If no natural person can be identified, the senior managing official may be treated as the beneficial owner, but that is a fallback, not a substitute for tracing. The consultant director and authorized signatory is not a beneficial owner merely because he signs or acts on instructions; he is a controller whose authority must be verified. Required documents include Zayn's constitutional documents and register of members, Falcon's register and certificate of incumbency, the trust deed, certified IDs of individuals, a beneficial ownership declaration, and evidence of the consultant's authority. Sanctions and PEP screening should cover all identified persons.
2. Decide whether the bank should onboard the customer, and specify the enhanced due diligence measures and approval level required.
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The customer presents multiple higher-risk features: a 60% shareholder in a free zone, a discretionary offshore trust, a nominee-style consultant signatory, expected turnover of PKR 500 million with receipts from unrelated parties in four countries, and a request for remote onboarding. These are EDD triggers, not automatic rejection grounds. The bank should not onboard on the documents already provided. It should first complete the beneficial ownership analysis and verify the trust structure. EDD should include senior management approval, independent verification of Falcon and the trustee, a full understanding of the trust's purpose and the source of the settlor's wealth, source of funds for expected transactions, verification of the identity of the beneficiaries or class, screening for sanctions, PEPs and adverse media, and a clear expected transaction profile. Remote onboarding should be supported by reliable independent verification, such as certified documents, video identification, a site visit or a trusted third-party check. The bank should also consider whether the consultant has authority to bind the company and whether the trustee's instructions are properly documented. If the bank cannot identify a natural-person beneficial owner or cannot satisfactorily explain the structure, it should decline the relationship. If it proceeds, the relationship should be approved at senior management level, subject to enhanced monitoring, lower alert thresholds and periodic review. Any suspicion arising from the trust structure or the customer's unwillingness to provide documents should be considered for an STR.