What’s a layered ownership structure?

A layered ownership structure is one where a company is owned or controlled through more than one legal entity, rather than directly by an individual. The company ownership sits in layers, often moving through other companies, partnerships or trusts before reaching the person who ultimately owns or controls the business.

Layered structures are common and often legitimate. They can be used for group management, investment, succession planning or international operations. However, from an anti-money laundering (AML) perspective, layering matters because each additional layer can make it harder to see who is really behind a company and who ultimately benefits from it.

This is why layered ownership is treated as a risk indicator under the UK’s risk-based AML framework.

How layered ownership structures work in practice

In practice, layered ownership usually appears in familiar forms rather than deliberately complex designs.

For example, a UK trading company may be owned by a UK holding company. That holding company might then be owned by another company or by individuals through a separate corporate vehicle. In cross-border cases, a UK company may be owned by an overseas parent, which is itself owned by another entity registered elsewhere.

Layering can also arise where trusts, partnerships or nominee arrangements sit above a company, or where ownership is split across multiple corporate entities for commercial or administrative reasons.

The issue is not the existence of layers but whether those layers reduce transparency over who ultimately owns or controls the business.

Why layered ownership increases AML risk

AML obligations focus on identifying and understanding the natural persons behind a client. Layered ownership makes this harder because it introduces distance between the company you are dealing with and the individual who ultimately owns or controls it.

Each layer can obscure:

• who benefits financially from the company’s activities;
• who exercises real decision-making power; or
• whether control exists through influence rather than shareholding.

This matters because criminals and sanctioned individuals often use layered structures to hide their involvement, create plausible distance from assets or frustrate due diligence. The UK’s National Risk Assessment of Money Laundering and Terrorist Financing (NRA 2025) continues to highlight complex and layered ownership as a common feature in money laundering typologies.

Layered ownership and beneficial ownership

A common misunderstanding is to treat identifying a corporate owner as the end of the process. In AML terms, that is only the starting point.

The UK definition of a beneficial owner focuses on the individual who ultimately owns or controls a client, whether through ownership, voting rights or other means of influence. This means that even a company with no individual shareholders holding a majority stake can still be controlled by a person exercising decisive influence over its affairs.

Companies House identity verification and layered structures

Recent reforms at Companies House introduce mandatory identity verification for directors, Persons with Significant Control (PSCs) and those filing information on behalf of companies. The aim is to improve the accuracy and reliability of the UK company register and reduce misuse.

These changes are a positive step for transparency. Verified identities make it harder for false or fabricated individuals to sit on company records and improve confidence in the information held on the register.

However, identity verification does not remove AML risk arising from layered ownership. A verified individual may still sit several layers above the company you are dealing with, or exercise control through indirect means. Verification confirms that a person is real, not that the structure they sit within is low risk.

For regulated professionals, Companies House data remains a useful source, but it does not replace the need to assess ownership, control and risk in context.

When layered ownership should prompt closer scrutiny

Layered ownership should encourage you to pause and understand the structure, rather than automatically escalate or decline a relationship. Closer scrutiny may be appropriate where:

• ownership chains appear unnecessarily complex for the client’s stated activity;
• overseas entities are used without a clear commercial rationale;
• control is difficult to explain or evidence;
• ownership or control changes frequently; or
• the structure does not align with the client’s profile or source of wealth.

These situations do not automatically indicate wrongdoing. They do, however, increase the importance of asking clear questions and documenting how you reached your conclusions.

What the regulations expect you to do

The UK Money Laundering Regulations 2017 (as amended) (MLRs) don’t prohibit layered ownership structures. Instead, they require you to respond proportionately where complexity increases risk.

In practical terms, this means applying a risk-based approach. In some cases, identifying ownership may be sufficient. In others, particularly where control or transparency is unclear, you may need to take additional steps to verify beneficial ownership, understand control mechanisms or apply enhanced due diligence.

Crucially, regulators expect you to document your reasoning. If a structure is layered but low risk, your file should explain why. If it is higher risk, it should show what additional steps were taken and how those steps addressed the risk.

Final thoughts

Layered ownership structures are a normal feature of modern business. The presence of layers does not make a client suspicious or unsuitable.

What matters is transparency. When layers make ownership or control harder to see, the regulations expect you to slow down, understand the structure and adjust your due diligence accordingly. Recent transparency reforms help but they do not replace professional judgement.

A simple question sits at the heart of every layered structure: can you clearly explain who ultimately owns or controls this client, and can you evidence how you reached that view?