With crime activities such as money laundering increasing, it is crucially important for proper measures to be taken to mitigate the risks that give rise to such criminal activities. The national risk assessment identified legal persons as vehicles prone to abuse for money laundering and terror financing activities.
As a result, the Companies and Intellectual Property Commission (CIPC) launched its beneficial ownership (BO) register for companies and close corporations on 1 April 2023.
The aim of establishing the BO register is to have a register of natural persons who own or exercise control over legal entities in order to assist law enforcement with relevant information when it comes to their investigations of who the ultimate owners of an entity are; and to mitigate the risks identified in the national risk assessment.
A beneficial owner means, an individual who, directly or indirectly, ultimately owns that company or exercises effective control over that company. However, that benefactor is to hold atleast 5% or more of the voting rights or beneficial interest in that company. This means that, where a person holds less than 5% beneficial ownership/ control, they will not be declared as such.
The type of entities to file the beneficial ownership will be Private companies, Non-profit companies, External companies and Close Corporations. These are the companies registered with the CIPC, thus Trusts are not allowed to submit the beneficial ownership.
This submission will, moving forward, ought to be submitted together with the annual return on the CIPC website. Where there is a non-compliance, the company will be charged an administrative fee. This applies also where there is falsified disclosure.
We can confidently say that, it is of vital importance for an entity to be in compliance and adhere to the regulations put in place to mitigate the risks of having to be a victim of criminal activities or face penalties of non-compliance.
