Legal persons and arrangements are essential for the conduct of business and are used for a broad variety of purposes. In order to enable the widest use of corporate vehicles, countries establish manifold types of legal entities and arrangements with changing structures. Nevertheless, these complex structures, as provided for by legislation, may give criminals the possibility to hide their assets, as well as to disguise them for the purposes of entering them into the financial system. In this respect, it is essential to understand the structure of such entities, both in respect of their ownership and control over their activities. Accordingly, the concept of beneficial ownership has been developed, requiring the identification of the ultimate natural person exercising influence over the legal entity.

The FATF Standards include requirements for countries to put in place measures ensuring that legal persons and arrangements are not misused for ML or TF, in particular by enhancing the transparency of such entities. In order to reflect the diversity of legal persons and arrangements amongst jurisdictions, the measures required by the FATF should apply to all relevant types thereof, including (but not restricted to) companies, foundations, limited liability partnerships, trusts and others.


The measures to be put in place in this respect include registration and accessibility of basic information about legal persons, timely access to up-to-date information on beneficial ownership, as well as measures preventing the misuse of bearer shares and nominee shareholders or directors. In addition, up-to-date information should also be available to competent authorities on a timely basis with regard to legal arrangements. The FATF has strengthened these requirements with the 2022 amendments to Recommendation 24 (Transparency and beneficial ownership of legal persons) and the 2023 amendments to Recommendation 25 (Legal arrangements), which require countries to ensure adequate, accurate and up-to-date information, maintained through multi-pronged mechanisms and accessible in a timely manner to competent authorities.

Whereas the requirement of registration of legal persons by state authorities sets concrete obligations for countries, the remaining requirements of the FATF Recommendations refer to achieving specific outcomes. Countries may therefore apply a customised approach which suits their legal system best, as long as the objectives of the Recommendations are achieved.