What’s an opaque ownership structure?

An opaque ownership structure is one where the identity of the person who ultimately owns or controls a legal entity is hidden, layered or difficult to establish. The entity itself may be entirely legitimate but the arrangement makes it hard to answer a fundamental question: who is really in charge, and who benefits?

For AML regulated professionals, this matters because opaque structures are one of the most commonly used methods for moving and concealing criminal funds. Understanding what they look like, why they present risk and what the regulations require you to do about them is central to applying effective customer due diligence.

Why is opaque ownership a money laundering risk?

Criminals exploit legal entities precisely because they can place distance between themselves and their assets. A company, trust or similar arrangement can hold property, open bank accounts, enter contracts and move money, all without making the underlying individual immediately visible.

FATF (the Financial Action Task Force), whose standards underpin UK AML law, identifies the misuse of legal persons and legal arrangements as one of the primary methods used to launder criminal proceeds. 

Its Recommendations 24 and 25 set global standards requiring countries to ensure that accurate, adequate and up-to-date beneficial ownership information is available to competent authorities. The UK’s Money Laundering Regulations 2017 (as amended) (MLRs) give those standards domestic legal effect.

The UK’s National Risk Assessment 2025 (NRA) is direct on this point. Complex corporate structures appear in most case studies and typologies for money laundering, and the risk of money laundering through the misuse of UK corporate structures remains high. 

The NRA also notes that kleptocrats, organised criminals and sanctions evaders frequently exploit trusts and opaque corporate structures to sidestep UK transparency rules.

What makes an ownership structure opaque?

Opacity can be introduced in several ways, and they are often used in combination. Common features include:

• layered corporate structures, where one company owns another, which owns another, making it difficult to trace who sits at the top;
• nominee shareholders or directors, where individuals appear on paper but are acting on behalf of someone else;
• trusts, where assets are held by a trustee for the benefit of beneficiaries who may not be publicly visible;
• offshore entities incorporated in jurisdictions with limited transparency or weak beneficial ownership registers;
• bearer shares, where ownership is determined by physical possession of a document rather than a registered record.

None of these features is inherently criminal. Complex structures exist for entirely legitimate commercial, tax and estate planning purposes. The issue is that they can also be deliberately designed to conceal. Your job as a regulated professional is to look through the structure and identify who is really there.

What the regulations require

Under Regulation 28 of the MLRs, you are required to identify any beneficial owner and take all reasonable measures to verify their identity. A beneficial owner is the natural person who ultimately owns or controls the entity, or on whose behalf a transaction is conducted. 

For companies, Regulation 5 defines this as a person who holds, directly or indirectly, more than 25% of the shares or voting rights, or who otherwise exercises control (such as a director involved in the daily running of the business without any shareholding). This is also known as a person with significant control (PSC).

Where there’s complex or layered ownership, you need to look through each level of the structure until you reach the natural person at the top. The MLRs make clear that you cannot rely solely on the Companies House PSC register for this purpose. AML responsibility sits with the regulated firm.

Where you cannot establish beneficial ownership to your satisfaction, you cannot proceed with the relationship or transaction. At that point you also need to consider whether the inability to verify creates reasonable grounds for suspicion.

The role of enhanced due diligence

Where a structure is complex, layered or involves offshore entities or high-risk jurisdictions, enhanced due diligence is likely to be required under Regulation 33. In practice, this means going further than standard checks. It can include:

• mapping the full ownership and control structure in detail;
• independently verifying the identities of beneficial owners using multiple sources;
• understanding source of funds and source of wealth at the level of the ultimate beneficial owner;
• obtaining senior management approval before proceeding;
• applying closer ongoing monitoring throughout the relationship.

The level of scrutiny should reflect the level of opacity and the overall risk the client presents, in line with your risk-based approach.

Documenting your reasoning

When a structure is complex or difficult to penetrate, your records need to show how you applied the appropriate level of due diligence. For example, how you mapped the structure, what sources you used to verify beneficial ownership, what questions you asked, and how you assessed and mitigated the risk. 

Supervisors reviewing AML compliance look for evidence of genuine thought, not just a completed checklist.

Where you identify a structure that limits your ability to establish who you are dealing with, that limitation should feed directly into your client risk assessment and influence the controls you apply.

Final thoughts

Opaque ownership structures are not inherently suspicious, but they do require closer attention. FATF’s standards and the UK’s MLRs both reflect a clear principle: regulated professionals must be able to identify the natural person behind any entity they act for and, where that is difficult, they must do more to find out.

When beneficial ownership is understood, verified and documented, it supports every other element of your AML framework. When it is not, it creates a gap that both criminals and supervisors will notice.