The new Beneficial Owners register in Norway was opened on the 1st of October 2024.
A challenge that came with the new register, is that the Beneficial Owners definition deviates from the Norwegian Anti Money Laundering legislation. This inconsistency reduces the value of the Beneficial Owners register as an information source in the AML work for obliged entities.
The purpose of this article is to illustrate the effect of the deviations.
The Beneficial Owners definition in the Norwegian AML-legislation is a little unclear, and it has been an ongoing discussion on how to interpret the AML-legislation and the guides from the Norwegian Financial Authority.
In this article, we will follow the methodology described in §14(1) of the AML legislation for identification of Beneficial owners. Please note that this methodology is not recommended by T-rank, as we believe it identifies a minimum set of natural persons for further assessment, rather than definitive Beneficial Owners.
The Beneficial Owners register legislation on indirect ownership: A person is said to control an entity if he/she, together with entities already found to be controlled by the person, owns at least 50% of the voting rights in the entity, A person is a beneficial owner of an entity whenever the person, together with all entities controlled by the person, holds more than 25% of the shares or more than 25% of the voting rights in an entity.
The AML legislation §14(1) on indirect ownership: In the AML legislation, it is sufficient to own more than 25% of the shares or 25% of the voting rights in order to obtain “control”.
Thus, it is sufficient to own more than 25% on every step in the ownership chain between a natural person and the entity in question.
Another important deviation between the two legislations is that in the AML legislation, close family should always be looked at as a unit when considering beneficial ownership, while there is no such notion in the register definition. When we look at the two definitions, it is obvious that the definition from the AML legislation could end up with more Beneficial Owners than the definition from the BO-register legislation.
The anonymized figure below shows the Beneficial Owners of a Norwegian company according to §14(1) of the AML legislation:
The company has 13 Beneficial Owners.
The figure below shows the Beneficial Owners of the same company according to the BO-register legislation:
The same company has one Beneficial Owner according to the BO-register legislation.
We have found other examples where the AML legislation §14(1) definition gives 27 Beneficial owners for a company, while the BO-register legislation definition gives 1 Beneficial Owner for the same company.
This inconsistency between the two definitions is regrettable and significantly reduces the effectiveness of the Beneficial Owners register for AML purposes.
Arne Petter Omholt, apo (at) trank (dot) no, +47 928 45 233