Controlling Persons

In tax reporting under CRS and FATCA, a company or trust that mainly earns passive income, such as interest or dividends, is not looked at on its own. The bank must find the people behind it and report them as well. For a company, these are the natural persons who ultimately own or control it, which mirrors the idea of a beneficial owner. For a trust, the term covers the settlor, trustees, protector, beneficiaries and anyone else with ultimate effective control. If no one can be found by ownership, a senior manager may be named. The bank usually takes the information on a form signed by the entity, and checks it against the customer due diligence file. The definition follows anti-money laundering rules, so a single review can serve both purposes. Skip this step and a person could keep income abroad simply by placing it inside a company.

A holding company opens an account with a bank and says it earns only dividends and interest. The bank asks for its controlling persons. The form lists two shareholders and the trust that appoints the directors. The bank collects their tax residence declarations and reports their details along with the account.