Beneficial owner: definition, threshold and method
Identifying the beneficial owner is one of the most delicate steps in AML/CFT due diligence. Here is the definition, the threshold, and a clear method for determining it.
The beneficial owner is the natural person or persons who actually own or control a client, or on whose behalf a transaction is carried out. The challenge: not stopping at the front company, but tracing back to the natural persons behind it.
The 25% threshold
Under French law, a beneficial owner is deemed to be any natural person who directly or indirectly holds more than 25% of a company's capital or voting rights, or who exercises control by other means. From 10 July 2027, with the entry into application of the AMLR regulation, the harmonised European definition will apply (a threshold of around 25%).
Ref. art. L.561-2-2 CMF; AMLR regulation EU 2024/1624.
When the threshold isn't enough: control "by other means"
A person can be a beneficial owner without crossing 25% of the capital, if they exercise effective control: a shareholders' agreement, the right to appoint senior managers, decisive financing. Conversely, if no person reaches the threshold or exercises identifiable control, the framework provides for designating the senior manager(s) by default — and documenting it.
A practical four-step method
- Gather the documents: the company registration extract (Kbis), articles of association, beneficial owners register, any shareholders' agreements.
- Reconstruct the ownership chain: who owns what, at what percentage, through which interposed structures (holding companies, property-holding companies (SCI), foreign entities).
- Calculate indirect ownership: by multiplying the percentages along each branch, then adding together the branches that lead to the same person.
- Conclude and document: identify the persons above the threshold or exercising control, and keep a record of the reasoning.
Why this is crucial in the event of an inspection
An incomplete or undocumented identification of the beneficial owner is one of the most frequent grievances raised in inspections. What matters is not just having "looked", but being able to show how you reached the conclusion, and when.
With Vigilae, the AI reads the documents and proposes the ownership chain all the way up to the beneficial owners; you validate each result, and the conclusion is recorded in a time-stamped evidence file. The tool prepares; the decision and the responsibility remain yours.
An informational article, up to date as of June 2026, which does not constitute legal advice.
Frequently asked questions
What is the beneficial owner threshold?
More than 25% of the capital or voting rights under current French law, or control by other means. The harmonised European definition will apply with the AMLR on 10 July 2027.
What should you do if no one reaches 25%?
The framework provides for designating the senior manager(s) as beneficial owners by default, documenting this choice.
How do you calculate indirect ownership?
By multiplying the percentages along each ownership branch, then adding together the branches that lead to the same natural person.
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