Concept
Behind every company, trust, or foundation stands a living person who ultimately owns or controls it—the beneficial owner. The international standard (FATF, EU AMLR) defines this person as a natural person who directly or indirectly holds a stake or control of 25% or more. Indirect ownership is calculated through the chain: stakes in intermediate companies are multiplied, and a person with 15% through one branch and 15% through another accumulates 30% and becomes a UBO. Control is not necessarily expressed through shares—it can be granted by the right to appoint directors, shareholder agreements, veto rights, or de facto influence through family arrangements. The essence of the concept is to see behind any screen of legal entities a specific person in whose interests everything is arranged—and it is precisely this disclosure that has become the center of the fight against money laundering over the past decade.
What is a nominee
A nominee shareholder holds shares, and a nominee director is listed in management on behalf of and at the instruction of the real owner—the nominator. Their relationship is formalized privately: a declaration of trust or nominee agreement records that the nominee acts exclusively on instruction and has no economic interest of their own. In the company's public documents, only the nominee is visible, while the true owner remains behind the scenes. Historically, such a structure served privacy—hiding the owner from competitors, creditors, and simply curious people who looked into the commercial register. The arrangement was often reinforced by bearer shares: the owner was considered to be whoever physically held the certificate, and tracing the chain was almost impossible.
Where nominees appear lawfully
Nominee and fiduciary figures exist not only in concealment schemes. A professional director or foundation council is a normal part of management when a family does not want to personally sit on company bodies. In a private trust company, the role of manager is performed by appointed persons acting according to constitutional documents. In private foundations—Stiftung, foundation—the council conducts affairs in the interests of beneficiaries while remaining accountable. Holding structures use corporate directors for the sake of continuity and uniform management of dozens of subsidiaries. In all these cases, the intermediary figure is disclosed to the regulator, bank, and registry, and privacy is preserved only from a casual observer in open sources. The problem arises where a nominee is placed so that the ultimate owner is not listed anywhere at all—it is precisely this structure that recent reforms have closed down.
How the world came to disclosure
The idea that the state has the right to know the ultimate owner took thirty years to develop. FATF appeared in 1989 and initially dealt with banks; it reached legal entities and trusts in Recommendations 24 and 25 only in the 2000s. The turning point came from leaks: the Panama Papers in 2016 and Pandora Papers in 2021 showed how offshore companies and nominees hide politicians and capital, and made the topic politically combustible. In parallel, automatic exchange was built—American FATCA from 2010 and OECD CRS from 2014 forced banks to determine the client's tax residency and their controlling persons. The European Union introduced beneficial ownership registers with the fourth and fifth AML directives, the United Kingdom launched a public PSC register in 2016. By the early 2020s, the anonymous company from old offshore textbooks ceased to exist as a working tool.
FATF Recommendation 24 and the turnaround
In March 2022, FATF rewrote Recommendation 24—the key standard for legal entity transparency—together with an explanatory note (Interpretive Note). Countries are now required to maintain "adequate, accurate, and current" information on beneficial owners and apply a multi-pronged approach: information is held by the company itself, by a public authority in the form of a beneficial ownership register, and if necessary by an additional mechanism. The approach is risk-based—both domestic legal entities and foreign structures with sufficient connection to the country must be assessed. Separately, the standard struck at historical concealment tools: the issuance of new bearer shares is prohibited, existing ones are subject to conversion or immobilization, and strict transparency requirements are imposed on nominee services. The explanatory note introduced the definitions of nominee director, nominee shareholder, and nominator and established the principle: a nominee by definition is never a beneficial owner. Identifying a UBO in a nominee structure means establishing the natural person in whose interests the nominee acts.
What countries are required to do
Countries are required to apply at least one of three mechanisms: require nominees to disclose their status and the identity of the nominator to the company and registry with an entry in the register; license nominee services with an obligation to store and provide data on the real owner; or prohibit nominee shareholders and directors altogether. Reform is proceeding locally. From January 2, 2025, the British Virgin Islands requires filing with the Registrar information when a shareholder acts as a nominee, including the identity of the nominator and the dates of commencement and termination of the relationship. Other classic offshore jurisdictions—the Cayman Islands, Seychelles, Belize—are implementing similar logic: professional providers are required to know the ultimate owner and disclose them upon request of the competent authority. For the structure holder, this means a simple thing—nominee service no longer separates their name from the regulator, it only removes that name from the public domain.
CRS, FATCA, and the bank's look-through
Registries are only one line of defense. The second is held by the bank. Under the CRS standard, a financial institution when opening an account determines who stands behind the client: if the company is passive and lives on dividends, interest, and rent, the bank is required to establish its controlling persons and report them to the tax authority of their country of residence. FATCA does the same with respect to Americans. Therefore, a nominee director on the account does not help—the bank as part of KYC will still reach the beneficiary, ask for source of funds, and enter precisely them in the report. From 2027, the same logic is extended to crypto assets: the CARF framework will require crypto services to collect data on owners and their controlling persons and transfer them to automatic exchange between jurisdictions.
Access to registries
At the same time, beneficial ownership registers have not become fully public. On November 22, 2022, the EU Court in joined cases C-37/20 and C-601/20 (Luxembourg Business Registers) declared invalid the provision of the fifth AML directive on unrestricted public access: the court considered general access to data on beneficial owners a disproportionate interference with the rights to private life and data protection (Articles 7 and 8 of the EU Charter). After the decision, access was narrowed to competent authorities, obliged entities when verifying a client, and those who prove a legitimate interest—for example, journalists and civil society. The 2024 reform package enshrined this model: the AMLR regulation and AMLD6 directive harmonize the rules, and the new supranational body AMLA in Frankfurt gains access to interconnected registers. The balance between transparency and privacy is discussed in more detail in the material on UBO registers.
Where transparency is heading
The vector is set—toward verified data and automatic access. From July 10, 2027, the main body of EU AMLR comes into force: a single definition of beneficial owner with a 25% threshold, the possibility of lowering it to 15% for high-risk sectors, unified registers across the EU. The standard is shifting from simple declaration to verification: the registry is required to actively cross-check declared names with other sources. By 2027, CARF for crypto assets is connected, and the segment of digital wallets, previously falling out of exchange, also becomes visible.
There is no complete uniformity yet. The United States in 2025 notably stepped back: FinCEN excluded American companies and their citizen-owners from reporting under the Corporate Transparency Act, leaving the obligation only for foreign companies registered in the States. The global transparency map remains patchy, and weaker zones still exist on it. But for the private client, the conclusion is stable: a nominee or offshore structure today works as a tool for management, privacy from outsiders, and asset protection—provided that the ultimate owner is honestly disclosed to the bank and registry. Betting on anonymity from the state itself no longer works: it creates legal risk for the holder where it previously provided peace of mind.
This material is an expert overview and does not constitute individual legal advice.