Control

Beneficial ownership has two doors, and a launderer only has to avoid one of them.

The first door is arithmetic: hold more than a set percentage of the shares, capital or profits and you are a beneficial owner. That is controlling ownership interest, and it is easy to dodge by splitting a holding.

The second door is control, and it does not care about percentages. The Rules and the IFSCA Guidelines define it as the right to appoint a majority of the directors, or to control the management or policy decisions — including by virtue of shareholding, management rights, shareholders agreements or voting agreements.

A person who owns 2% of a company but holds a shareholders agreement letting him name four of seven directors is a beneficial owner. The percentage never mattered.

The two limbs are applied together, customer type by customer type. Both the PML Rules (Rule 9(3)) and clause 6.3.6 of the IFSCA Guidelines set out the same ladder:

Where no natural person is identified under any of those limbs, the beneficial owner is the natural person holding the position of senior managing official. Somebody is always named.

The PMLA's own definition, Section 2(1)(fa), is built on the same idea: a beneficial owner is an individual who ultimately owns or controls a client, or the person on whose behalf a transaction is conducted, and includes a person who exercises ultimate effective control over a juridical person.

Note the control limb is wider for a company than for a partnership — the partnership definition has no director-appointment right in it, because a partnership has no board.

A GIFT IFSC Registered FME onboards Halcyon Holdings Ltd, a Mauritius company subscribing USD 3 million to a fund on 15 July 2025.

The share register looks clean. Five shareholders, none above the line:

On the arithmetic alone, the FME would conclude there is no beneficial owner and fall back to the senior managing official. But the CDD file also contains the shareholders agreement, and clause 7 of it gives Ms Noor the right to nominate three of the five directors.

That is control. Ms Noor is a beneficial owner of Halcyon on the control limb, at 9.5%, and the FME must identify and verify her identity, screen her against the UNSC sanctions lists, and determine whether she is a politically exposed person.

Suppose instead the agreement had been withheld, so that the FME could not tell who controlled the company. The IFSCA Guidelines are unambiguous: a Regulated Entity shall not establish a business relationship with a legal person where the ownership or control arrangements prevent it from identifying one or more beneficial owners. The USD 3 million is refused — and the Chapter 6 sample question on precisely this point is a True/False.

Chapter 3 (Rule 9(3)) and Chapter 6 (section 6.3.6, Parameters to Identify and Verify the Identity of Beneficial Owners) both carry the definition, once for the Rules and once for the Guidelines. The percentages and the two limbs are among the most heavily examined numbers in the paper, and Chapter 6's sample question tests the refusal rule directly.

• 10% for a company and a partnership; 15% for an unincorporated association or body of individuals. The workbook says "body of individuals" includes societies.
• Control has no percentage. A shareholders agreement, a voting agreement or a management right can make a small holder the beneficial owner.
• The partnership control limb is narrower — management or policy decisions only, with no director-appointment right, because there is no board to appoint.
• The senior managing official is a fallback, not a first answer. Reach it only when no natural person is identified on either limb.
• "Control" here is a KYC test, not a company-law or takeover-code test. Do not import a definition from another paper.
• If control cannot be identified, the answer is to refuse the relationship, not to record "not ascertainable" and proceed.
• The trust limb is where the workbook contradicts itself: clause 6.3.5(b)(i) says beneficiaries with fifteen per cent or more interest, while clause 6.3.6(d) and Rule 9(3)(e) both say ten per cent or more. Two of the three sources say ten; answer ten unless the question quotes 6.3.5 back at you.