In this article different definitions and concepts are compared in the quest to determine who qualifies as beneficial owners of trust assets. The phrase “beneficial owners” is found in trust and tax law, as well as in various pieces of legislation aimed at the combatting and prevention of the financing of terrorism and international money-laundering. Worldwide, there are civil, criminal and tax courts charged with the task of determining who qualifies as beneficial owners of a particular legal entity or trust. A number of attempts have been made by international organisations, such as the OECD and FATF, as well as by way of legislation, such as the FATCA, to establish definitions to identify beneficial owners. The application of the beneficial-ownership concept by the courts in certain jurisdictions, as well as the appropriation thereof within the European Union’s money-laundering prevention initiatives, are considered in this contribution. Beneficial ownership has featured locally in various contexts, such as trust law, tax legislation and divorce. In an apparent absence of any attempt to coordinate the different definitions and descriptions of the concept of beneficial ownership, the question is whether any synergy exists between the manner in which the concept has developed in South African trust law, compared to the different definitions and applications thereof in international instruments and the courts. In this article the underlying motivations for the concept in various forms – be it legislation, conventions, treaties, or courts of law – are identified. The author concludes that the various role-players are not pursuing the same goals, resulting in unnecessary confusion regarding the concept.

 

Keywords: beneficial ownership; trust law; anti-avoidance measures; substance-over-form approach