Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

According to FATF, who qualifies as a 'beneficial owner'?

1. A person who only has signature authority on an account

2. A natural person who ultimately owns or controls a customer

3. A legal entity with no ultimate owner

4. A financial advisor acting on behalf of a customer

The correct answer is: A natural person who ultimately owns or controls a customer

The concept of a 'beneficial owner' is crucial in the fight against money laundering and terrorist financing, as highlighted by the Financial Action Task Force (FATF). A beneficial owner is defined as the natural person who ultimately owns or controls a customer, even if their ownership or control is exercised indirectly through other entities or arrangements. This definition is significant because it aims to uncover the actual individuals who benefit from the assets and transactions of an entity, as opposed to just those who may have functional roles, such as signature authority or formal representation. Identifying beneficial owners allows financial institutions and regulatory bodies to better assess risks related to money laundering and to ensure transparency in financial systems. The other options do not capture the essence of a beneficial owner. Having only signature authority does not imply ownership or control over the underlying assets. A legal entity with no ultimate owner contradicts the definition, as there must be individuals who ultimately benefit from the entity’s activities or assets. Lastly, a financial advisor acting on behalf of a customer does not qualify as a beneficial owner since their role is to facilitate transactions rather than to own or control the assets. This understanding is vital for compliance with anti-money laundering regulations and supports the broader goals of enhancing transparency in financial transactions.