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DEFINITION

Controlling Person (CP)

In the context of KYC/KYB, a controlling person is an individual who exercises significant control or influence over a legal entity, trust or foundation. Significant control can in this context refer to having significant ownership stakes, possessing major voting rights, the power to veto a decision, sign on behalf of the business or being authorized to make critical decisions.

Identifying the controlling person of a legal entity is essential for staying compliant with AML/CFT regulations as they can qualify as a beneficial owner and thus must be screened in accordance with the financial institution’s KYC policy.

Synonyms

Ultimate controller, significant controller

Acronyms

CP

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Synonyms

Ultimate controller, significant controller

Acronyms

CP

Examples

A financial institution onboarding a corporate client is required to identify the beneficial owners of the business. They first identify individuals with ownership of 25% or more of the company. They then look for the controlling persons. The highest managing director is identified as a controlling person due to their position. Two additional persons from the C-suit are also determined to have significant sway within the company and are thus categorized as controlling persons and beneficial owners.

FAQ

Individuals with significant ownership, voting rights, or influence over a legal entity’s decision making all qualify as controlling persons. Controlling persons can also have indirect control. For example, the ultimate beneficial owner of a legal entity that owns more than 40% of a different legal entity qualifies as a controlling person for both businesses.

Financial institutions identify the controlling persons by analysing governance documents, shareholder registers and contractual agreements.

Identifying the beneficial owners of a legal entity is essential for staying compliant with AML/CFT regulations, improving transparency and mitigating the risk of financial crimes. To do so, identifying the controlling persons and major shareholders is necessary.

Related Terms

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