FIC Guidelines No 001/2023 on Transparency and Beneficial Ownership

# REPUBLIC OF RWANDA  
FINANCIAL INTELLIGENCE CENTRE (FIC)

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## FIC GUIDELINES N° 001/2023 ON TRANSPARENCY AND BENEFICIAL OWNERSHIP

NOVEMBER 2023

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### TABLE OF CONTENTS

- LIST OF ACRONYMS & ABBREVIATIONS ................................................... ii  
- 1. GENERAL INTRODUCTION ............................................................................ 1  
- 2. SCOPE OF APPLICATION ............................................................................... 2  
- 3. PURPOSE OF THESE GUIDELINES ............................................................... 2  
- 4. DEFINITIONS ................................................................................................... 3  
    - 4.1. Beneficial owner .................................................................................. 3  
    - 4.2. Legal Person ........................................................................................... 4  
    - 4.3. Legal Arrangement ............................................................................... 4  
- 5. MISUSE OF LEGAL PERSONS AND LEGAL ARRANGEMENT BY CRIMINALS ................................................................................................................... 4  
- 6. OBLIGATIONS OF REPORTING PERSONS ON BENEFICIAL OWNERSHIP REQUIREMENTS ........................................................................................................... 5  
    - 6.1. Applying Customer Due Diligence ...................................................... 5  
        - 6.1.1. Beneficial owner identification ................................................. 5  
        - 6.1.2. Verification of Beneficial Ownership information ................... 13  
        - 6.1.3. Timing of Verification of Beneficial Ownership information ....... 13  
    - 6.2. Keeping Records of beneficial owner information ......................... 14  
    - 6.3. Updating of Records of beneficial owner information ................. 14  
- 7. COMMENCEMENT ........................................................................................... 15  
- APPENDICE: Practical examples ................................................................. 16  
    - A. Illustration on Controlling Ownership .............................................. 16  
        - A.1. Controlling ownership by shares through chain of legal person (Simple) ........................................................................................................... 16  
        - A.2. Controlling ownership by shares through chain of legal persons (Complex) ........................................................................................................... 16  
    - B. Illustration of effective Control through Position .................................. 17  

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### LIST OF ACRONYMS & ABBREVIATIONS

- **AML**: Anti Money Laundering  
- **BO**: Beneficial Owner  
- **CDD**: Customer Due Diligence  
- **CFP**: Counter Financing of Proliferation  
- **CFT**: Counter Financing Terrorism  
- **DFNBPs**: Designated Non-Financial Businesses and Professions  
- **EDD**: Enhanced Due Diligence  
- **FATF**: Financial Action Task Force  
- **FIC**: Financial Intelligence Centre  
- **ML/TF**: Money Laundering / Terrorism Financing  
- **NPOs**: Non-Profits Organizations  
- **PEP**: Politically Exposed Persons  
- **TCSPs**: Trust and Company Service Providers  
- **UNODC**: United Nations Office on Drugs and Crime  

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## 1. GENERAL INTRODUCTION

Legal persons and legal arrangements conduct a wide range of important commercial activities worldwide. They play an essential role in the national and global economic development. However, Legal persons and legal arrangements can be misused by criminals for illegal purposes including money laundering, financing terrorism, financing proliferation, corruption, tax fraud and other activities. This misuse can be effectively prevented, if the information regarding both customer and beneficial owner, the source of assets and their activities is well recorded, kept and easily available to competent Authorities.

The lack of access to beneficial ownership information of legal persons and legal arrangements by competent authorities is a significant challenge for a successful investigation. The availability of such information is so useful in following money and can assist competent authorities by identifying individuals who may be responsible for the underlying criminal activity or who may have relevant information to support the investigation.

To prevent legal persons and legal arrangements from being misused for criminal purposes, Financial Action Task Force (FATF) standards require countries to prevent such misuse by ensuring that there is adequate, accurate and up-to-date information on the beneficial ownership and control of legal persons and legal arrangements that can be obtained or accessed rapidly and efficiently by competent authorities¹.

In line with those standards and ensuring that legal persons and arrangements are not misused by criminals, reporting persons are required by the Law n° 028/2023 of 19/05/2023 on prevention and punishment of money laundering, financing of terrorism and financing of proliferation of weapons of mass destruction, to identify the beneficial owner of their customer, and take reasonable measures to verify the identity of the beneficial owner, such that the reporting person is satisfied that it knows who the beneficial owner is and also to keep records on the identification data obtained through the customer and beneficial owner verification process and other related documents for a period of at least ten (10) years after the end of the business relationships.

Moreover, the Law requires Authorities in charge of registration of legal persons or legal arrangements to ensure that they maintain adequate, accurate and timely information on the beneficial ownership and control of legal persons and legal arrangements. That information must be obtained or accessed in a timely manner by competent authorities and reporting persons.

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## 2. SCOPE OF APPLICATION

These guidelines apply to all reporting persons as provided for by the Law N° 75/2019 of 29/01/2020 as amended to date including Financial Institutions, DNFNBPs and NPOs.

These guidelines incorporate essential elements of the AML/CFT/CFP Law, relevant FATF-Recommendations, and other international best practices on AML/CFT /CFP regime. These guidelines do not replace the AML/CFT/CFP law, regulations or any other guidelines issued by supervisory authorities; they complement each other.

## 3. PURPOSE OF THESE GUIDELINES

The purpose of these guidelines is to assist reporting persons understand their AML/CFT/CFP obligations as far as transparency and beneficial ownership are concerned in order to implement them.

They are also meant to assist them to design and implement appropriate measures to prevent the misuse of legal persons and legal arrangements in line with the AML/CFT/CFP standards.

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## 4. DEFINITIONS

### 4.1. Beneficial owner

A natural person (s) who ultimately owns or controls a customer or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or legal arrangement. Only a natural person can be an ultimate beneficial owner, and more than one natural person can be the ultimate beneficial owner of a given legal person or arrangement.

From this definition, there are points to note including ‘who ultimately owns or controls’ and ‘who exercise ultimate effective control’. These points refer to situations in which ownership/control is exercised through a chain of ownership or by means of control other than direct control.

The essential element from this definition is that the beneficial ownership goes beyond the legal ownership and control over the legal persons to consider the notion of ultimate (actual) ownership and control.

The beneficial ownership in the context of legal persons should be distinguished from the Legal ownership and control.

Legal ownership refers to the natural or legal persons who, according to relevant Laws own the legal person. Control refers to the person with decision making ability within the legal person who has the power to impose those decisions. The beneficial owner refers to the natural person who actually owns or controls or exercises an effective control over a legal person and may or may not have legal ownership.

The beneficial ownership focuses on the natural person (not legal) whereas the legal ownership covers not only natural person but also legal person; with the control, the person has the ability to take and impose decision while the beneficial owner actually owns through assets, capital, or any other means, actually controls or exercises effective control over a legal person be it directly or indirectly even where not legally entitled to do so.

Moreover, the essential element to consider from the definition of beneficial ownership is that it includes natural persons on whose behalf a transaction is being conducted, even where that person does not have actual or legal ownership or control over the customer.

A customer in this context refers to any person who enters into a business relationship or carries out an occasional financial transaction with a financial institution or designated non-financial businesses and professions (DNFBPs).

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### 4.2. Legal Person

Legal Person refers to any entities other than natural person that can establish a permanent customer relationship with a reporting person or otherwise own property. This includes a company, cooperative, institution, national non-governmental organization, international nongovernmental organization, foundation, partnerships, and faith-based organization with legal personality.

In a given legal person, different persons may have different interests or roles and may have or exercise controls at different levels.

### 4.3. Legal Arrangement

Legal arrangement refers to a relationship established pursuant to a contract between two or more parties that does not result in the emergence of a legal person (express trusts³ being the most common, as well as other forms of trust or other similar legal arrangements).

In a trust, the legal ownership and control of an asset are separated from the equitable interests in the asset. Therefore, different persons might own, benefit from, and control the trust, depending on the provisions of the document establishing the trust such as the trust deed.

## 5. MISUSE OF LEGAL PERSONS AND LEGAL ARRANGEMENT BY CRIMINALS

A number of studies conducted by FATF⁴, World Bank and UNODC⁵ discussed the misuse of legal persons and legal arrangements for illegal purposes. According to these studies, the misuse of legal persons and arrangements for money laundering/financing terrorism, is facilitated by the lack of adequate, accurate and timely beneficial ownership information especially the identity of known or suspected criminals, the true purpose of the account or assets of legal person or arrangement as

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³ Express trust: Express trust refers to a trust clearly created by the settlor, usually in the form of a document e.g. a written deed of trust. They are to be contrasted with trusts which come into being through the operation of the law and which do not result from the clear intent or decision of a settlor to create a trust or similar legal arrangements (e.g. constructive trust).  
⁴ FATF Guidance on Transparency and Beneficial ownership, October 2004, pg 6  
⁵ The Puppet Masters report was published in 2011 by the World Bank / UNODC STAR. This comprehensive report examined over 150 cases of large-scale corruption and found that most cases of large-scale corruption involve the use of one or more corporate vehicles to conceal beneficial ownership. The report examines the use of legal structures to hide stolen assets, outlines in detail how corporate vehicles can be used to facilitate corruption, identifies significant challenges that countries face when seeking to implement measures to prevent corporate vehicles being misused in corruption schemes, and provides recommendations to countries on how to address these challenges

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well as the source or use of funds or assets associated with legal persons or legal arrangements.

The beneficial ownership information can be hidden using different schemes in the structure or ownership of legal persons or legal arrangements. This can be done through the use of incorporated companies without significant operations or relevant assets or equipment, companies with complex ownership and control structures, use of trust and use of intermediaries in creating legal persons etc.

These are done with the intention to conceal the control of funds or assets or to increase the difficulty for competent authorities to obtain accurate information on ultimate beneficial owner.

## 6. OBLIGATIONS OF REPORTING PERSONS ON BENEFICIAL OWNERSHIP REQUIREMENTS

Reporting persons are required by the Law n° 028/2023 of 19/05/2023 on prevention and punishment of money laundering, terrorism and financing of laundering, financing of proliferation of weapons of mass destruction to apply Customer Due Diligence (CDD) measures to their customers and beneficial owners. This is done for collecting adequate and accurate information on customers and beneficial owners of a given transaction.

Moreover, reporting persons are required, by the said Law to keep records of the beneficial ownership information.

### 6.1. Applying Customer Due Diligence

Under the Customer Due Diligence requirement, a reporting person must identify not only the customer but also the beneficial owner and verify their identification documents prior to the establishment or during the business relationship.

#### 6.1.1. Beneficial owner identification

The CDD measure requires reporting persons to take all necessary measures to identify the beneficial owners of their customers and verify their identity before the establishment or during the course of the business relationship.

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In addition, whenever there is uncertainty as to whether the customer acts on his or her personal behalf, the reporting person must obtain information in order to establish the exact identification of the person on behalf of whom the customer acts.

Identifying beneficial ownership of a customer is an obligation that must be satisfied regardless of the level of risk associated with that customer. Reporting persons are required to examine as many levels of information from the legal person or legal arrangement structure to accomplish this obligation.

In this regard, it is very important to look for information that describes ownership, control and structure of legal person or legal arrangement in relation to beneficial owner.

The modalities for determining the beneficial owner of a customer depends on the category of customer or business relationship:

- whether the customer is a natural person, a company, a partnership, a foundation, a collective investment scheme, a trust; or  
- whether the transaction is related to a life insurance policy or investment related insurance policy; or  
- whether the person seeking to establish the business relationship is acting on behalf of the customer.

### A. Determination of beneficial ownership information

The modalities for determining the beneficial owner of a customer for legal person or legal arrangement are set below:

**For a legal person**, the beneficial owner identification information can be determined through⁶:

i. the identity of the natural persons (if any, as ownership interests can be so diversified that there are no natural persons, whether acting alone or together, who exercise control of the legal person through ownership) who ultimately have a controlling ownership interest in a legal person; and  
ii. to the extent that there is doubt as to whether the person(s) with the controlling ownership interest (which depends on the ownership structure of the legal person, for example the percentage of shares) are the beneficial owner(s) or where no natural person exerts control through ownership interests, the identity of the natural persons (if any) exercising control of the legal person through other means;  
iii. Where no natural person is identified under the two points above, reporting persons have to identify and take reasonable measures to verify the identity of the relevant natural person who holds the position of senior managing official in the legal person.

**Determination of beneficial ownership through controlling ownership interest:**

The ultimate ownership or effective control of the legal person can be identified through the controlling ownership interest. Natural person may control the legal person through the ownership interest when that person directly (through the ownership of shares within the legal person) or indirectly (through the chain of legal persons) holds a minimum percentage of ownership interest in the legal person. The beneficial owner through controlling ownership interest, for the purpose of AML/CFT/CFP, is the natural person who owns at least twenty-five percent (25 %) of the shares and /or who exercises at least 25 % of voting rights in the legal person.

Moreover, the controlling ownership can be demonstrated when the person, even though with less than 25% of the voting interest, or of shares, exercises control over the legal person based on his/her ownership alone or together with other shareholders, including through any contract, understanding, relationship, intermediary or tiered entity.

**Determination of beneficial ownership through other means:** The control of a Legal person can also be done through other means such as:

- Personal connections to persons in senior positions such as Executive Directors/ CEOs/ Managing Director of the legal person;  
- Significant authority over a legal person’s financial relationships (including with financial institutions that hold accounts on behalf of a legal person) and the ongoing financial affairs of the legal person;  
- Control without ownership by participating in the financing of the enterprise, or because of close family relationships, historical or contractual associations, or if a company defaults on certain payments;  
- Use, enjoyment or benefiting from the assets owned by the legal person even if control is never exercised.

**Determination of beneficial ownership through position:** The control over a legal person can be exercised by a natural person through positions held within a legal person such as the natural person responsible for strategic decisions that fundamentally affect the business practices or general direction of the legal person or the natural person who exercises executive control over the daily or regular affairs of the legal person through a

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senior management position, such as a Chief Executive Officer (CEO), Chief Financial Officer (CFO), Managing or Executive Director, or President.

**Determination of beneficial ownership in relation to a collective investment scheme customer**

A collective investment scheme refers to a type of scheme where there is an arrangement for collecting and pooling funds from investors or participants for the purpose of investment in the interest of each participant or investor represented by his or her proportional ownership in the scheme⁷.

In Rwanda, Collective investment schemes may take the form of an investment company scheme, a partnership scheme, a unit trust and a contractual scheme. A Collective Investment Scheme can only be created, managed, and operated by a legal entity technically known as “operator” and not individuals.

When a reporting person has a collective investment scheme represented by its management company as customer, the reporting person must identify and verify the beneficial owners of the management company as well as the beneficial owners of the collective investment scheme.

**Determination of beneficial owners of an insurance policy holder**

In addition to the identification of the beneficial owners of the customer seeking to establish a business relationship with an insurance company, insurers and intermediaries are required to identify the beneficiaries of life insurance and other investment-related insurance policies depending on whether the beneficiaries are identified/designated or not. The following information should be collected by insurers or their intermediaries:

i. name of the natural or legal persons or legal arrangements who are beneficiaries; and  
ii. for beneficiaries that are designated by characteristics or by class (e.g. spouse or children at the time that the insured event occurs) or by other means (e.g. under a will) – the insurer or intermediary should obtain sufficient information concerning the beneficiary to satisfy the insurer or intermediary that it will be able to establish the identity of the beneficiary at the time of the payout; and.

As for the identification of the beneficial owners of the beneficiaries of a life insurance and other investment-related insurance policies which is a legal person or arrangement, insurers and intermediaries are required to apply the methods described for legal person or legal arrangements.

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⁷ Article 3 of Law N° 062/2021 of 14/10/2021 governing collective investment schemes

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**Determination of beneficial owners where a person is acting on behalf of the customer**

In situations where a person(s) acts on behalf of a customer, such a person does not form part of the beneficial ownership concept, but form part of the Customer Due Diligence obligations.

A person acting on behalf of a customer is not necessarily a beneficial owner(s) of that customer. Acting on behalf of the customer is when a person is authorized to carry out transactions or other activities on behalf of the customer. Authority to act should not be confused with “effective control”.

Reporting persons are required to identify and verify any person who has authority to act on behalf of a customer. Reporting persons must determine whether the customer is acting as an agent for or on behalf of another, and if so, obtain information regarding the capacity in which and on whose behalf the customer is acting. This may include:

- a person with authority to sign, amend account holder details, transfer and spend in the customer’s name (e.g. a signatory or second cardholder on a spouse’s account);  
- a person granted authority because they are the legal guardian of a minor or the holder of an operational power of attorney, or similar;  
- an individual who is authorized to represent any legal person appointed as a professional third party to act for the customer;  
- a person who is authorized to use a password (or similar) to log into an account or facility held by the customer (e.g. internet or mobile banking); or  
- an employee of the customer who undertakes daily banking duties for the customer.

If a reporting person knows that someone (person A) is conducting an occasional transaction on behalf of another person (person B), then person A and person B should be identified and verified along with any other beneficial owners.

**For legal arrangement**, the beneficial owner means the natural person(s), at the end of the chain, who ultimately owns or controls the legal arrangement, including those persons who exercise ultimate or effective control over the legal arrangement, or the natural person(s) on whose behalf a transaction is being conducted.

Reporting persons are required to identify the beneficial owners of the customer who is a legal arrangement and verify their identity.

**For Trusts**, the following qualify to be the beneficial owners:

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i. The settlor;  
ii. The trustee;  
iii. The protector;  
iv. The enforcer, if any;  
v. The Beneficiary, and if the latter’s identity is not determined or verified, then the class of beneficiaries in whose favor the trust was established;  
vi. Any natural persons who belong to the category of persons in whose main interest, the trust was established or operates, where the natural persons who are beneficiaries have not yet been designated;  
vii. Any other natural person exercising an effective control over the trust though direct or indirect ownership or through other means because of the special power they may be exercising alone or jointly (including through a chain of control/ownership).

When a party of a trust is not a natural person but a legal person or a legal arrangement, the beneficial owners of that legal person or arrangement (but not the legal person or arrangement itself) should be identified as beneficial owners of the trust. This means that non-natural persons who are party to a trust should be looked through to identify the beneficial owners.

For other types of legal arrangements, the identity of persons in similar or equivalent positions as those for a Trust, taking into account the different forms and structures of these other types of legal arrangements.

### B. Basic information on the customer and beneficial owners

In order to identify the legal person/arrangement customer, reporting persons are required to gather basic information about the legal person/arrangement itself, which, at a minimum would include information about the legal ownership and control structure of the legal person/legal arrangement. This would include information about:

**Customer (Individual):**

i. Full name  
ii. Residential address,  
iii. mailing address  
iv. Contact numbers,  
v. email addresses  
vi. Place of birth,  
vii. date of birth  

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viii. Gender  
ix. Marital status  
x. Nationality  
xi. Government-issued identification number  
xii. Government-issued tax identification number  
xiii. Occupation  

**Customer (Entity):**

i. Name of the legal person;  
ii. Type of legal person;  
iii. Date of incorporation;  
iv. Place of incorporation;  
v. Constitution  
vi. Articles of Association  
vii. Certificate of Incorporation  
viii. Annual report Directors  
ix. Shareholders or members and its directors. In case of nominee shareholders and nominee directors, the names of nominees and of nominators  
x. Number of shares held by each shareholder and categories of shares (including the nature of the associated voting rights);  
xi. Senior Management  

**Customer (Trust):**

i. Name of Trust  
ii. Settlor’s information  
iii. Trustee’s information  
iv. Beneficiaries’ information  
v. Protector’s information  

In respect of the beneficial owner, the reporting person must obtain the following information:

a) Full names of the beneficial owner;  
b) Residential address, business, postal and/or email address;  
c) Nationality;  
d) Date and place of birth;  

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e) National ID/Tax identification number;  
f) Occupation;  
g) Date on which the individual became a beneficial owner;  
h) Nature and extent of ownership interest held;  
i) Nature and extent of control exercised;  
j) Date of cessation as a beneficial owner;  
k) In respect of a class of beneficial owners, information sufficient to identify and describe the class of individuals who are beneficial owners.

### C. The Source of information

Information that relates to the beneficial ownership of legal person or arrangement can be found in different places, including open sources, company registries, financial institutions, DNFNBPs, the legal person itself, and other national authorities, such as tax authorities or stock exchange agencies or from other reliable sources.

The relevant identification data may also be obtained from a public register, asset registries for land, property and vehicles, trust deed, registration or incorporation document, memorandum of understanding, constitution or rules of the legal person or arrangement, from the customer or from other reliable independent sources.

A reporting person may obtain identifying information for beneficial owner(s) of legal entity customers through a completed certification form from the customer, provided the customer certifies, to the best of his/her knowledge, the accuracy of the information.

A reporting person may also rely on the information supplied by the individual seeking to establish the business relationship on behalf of the legal entity customer regarding the identity of its beneficial owner(s).

Where a legal entity, the customer, opens multiple accounts with a financial institution, the financial institution may rely on the pre-existing beneficial ownership records it maintains, provided that the financial institution ensures that such information is up-to-date and accurate at the time each new account is opened.

Documents that can contain information on the beneficial owners of a legal person/ legal arrangement include:

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- a certificate of incorporation of a company  
- articles of association  
- a partnership agreement  
- a trust Instrument  
- a foundation charter  
- the constitution and/or certificate of incorporation for an incorporated association  
- the constitution of a registered cooperative.  

A person acting on behalf of a legal personal arrangement must present evidence and document empowering his/her to act on his or her behalf, as well as his or her identity card or other official identification document. When a person acting on behalf of a legal person or arrangement is unable to fulfil the requirements allowing the verification of his or her identification, the reporting person may reject or refuse any business relationship with that person.

### 6.1.2. Verification of Beneficial Ownership information

Reporting persons must take reasonable measures to verify the identity of the beneficial owner, such that the reporting person is satisfied that it knows who the beneficial owner is. The verification of the identity of beneficial owners should be conducted using reliable and independent source documents. This may include, but is not limited to, conducting verification through independent documents provided by the customer, reliance on public registries or government authorities, researching publicly available information or through a face-to-face meeting with the beneficial owner to corroborate the undertaking or declaration provided by the customer.

For foreign beneficial owners, where there is no existing independent and reliable document on the beneficial owner, reporting persons should verify the identity of the beneficial owners through open available sources.

### 6.1.3. Timing of Verification of Beneficial Ownership information

The verification of beneficial owners must be done at the on-boarding stage, as well as when there are any changes to the beneficial ownership information.

After verification, if uncertainty persists on the identification of the beneficial owner, the reporting person makes a report on a suspicious transaction and forwards it to the Centre within twenty-four (24) hours as of the time he or she receives the customer.

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In verifying the identity of beneficial owner, reporting persons should apply risk-based approach and the beneficial owner risk profiling has to be conducted and referred to for taking mitigating actions.

### 6.2. Keeping Records of beneficial owner information

The reporting persons must keep and maintain all detailed records in relation to the beneficial owners for a period of ten (10) years after the business relationship is ended, or after the date of the occasional transaction. This includes all records obtained from Customer Due Diligence measures, records on transactions, account files, business correspondences and other relevant information on beneficial owner.

All records on the beneficial ownership and control over legal persons and legal arrangements have to be adequate, accurate, updated regularly, retained, and recorded in readily auditable manner. Such information must be accessible to competent authorities.

### 61.3. Updating of Records of beneficial owner information

Reporting persons are required to ensure that customer information, including documents, data and information related to beneficial ownership information are kept updated.

In this respect, reporting persons must update beneficial ownership information when in the normal course of business at least every year and whenever, they become aware of a change in the data related to beneficial ownership.

Reporting persons must provide in their internal procedures, the methods for updating the beneficial ownership information, including its frequency, as well as the nature and extent of the information elements to be updated.

Reporting persons also need to take in account the relevant changes affecting the customer’s business relationship or situation. In this respect, they should ensure in particular that they have, throughout the business relationship, information relating to the identification and powers of persons acting on behalf of the customer.

Reporting persons must also implement appropriate internal control measures to ensure compliance by their employees with the obligation to update beneficial ownership information. Regular updating of knowledge of the business relationship is indeed essential for the effective exercise of constant vigilance and monitoring of the operations carried out.

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The fact that an account has been opened of recent, does not exempt a reporting person from its obligation to update when the information elements collected at the start of the business relationship do not make it possible to raise an alert relating to one or more atypical operations. Such an update may be particularly necessary with regard to the origin of the funds and the purpose of the transaction.

Furthermore, as provided for when entering into a business relationship, reporting persons must analyze the information elements thus updated. They reassess, as necessary, the risk profile of the business relationship accordingly, according to the updating procedures provided for in their internal procedures internal.

## 7. COMMENCEMENT

These Guidelines enter into force on the date of their signature and they replace any previous Guidelines on the same subject.

Done at Kigali on... 21/11/2023

GASHUMBA Jeanne Pauline  
Director General  

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## APPENDICE: Practical examples

Examples provided in these guidelines are illustrations to assist reporting persons meeting their obligations, they are not meant to be exhaustive.

### A. Illustration on Controlling Ownership

The reporting entities have to understand the ownership and control structure of the customers. The threshold for controlling interest owns 25% or more of the customer. The ownership can be simple and complex in nature. Few practical examples are as follows:

#### A.1. Controlling ownership by shares through chain of legal person (Simple)

[Diagram: Company O (Customer) — 25% → Mr. Fee; Company O — 75% → Company A — 100% → Mr. Fee]

Mr. Fee is the sole beneficial owner of Company O (Direct 25% + Indirect 75%)

In the above illustration Mr. Fee is a unique/sole beneficiary owner of the company O throughout two ways:

i. Directly: 25%  
ii. Indirectly: 75%

#### A.2. Controlling ownership by shares through chain of legal persons (Complex)

In the illustration below Mr. Os, Mr. Joe and Mr. Guy are ultimate beneficial owner of the Company LDK Ltd via following legal persons:

i. Company ROP ltd belongs 100 % to Mr. Guy and hold 50% of LDK Ltd  
ii. Mr. Os and Mr. Joe throughout their respective Companies (JM ltd and KRM ltd) are owners of LAMN Ltd by shares which in return possesses 50% of LDK Ltd

Meaning that Mr. Os, Mr. Guy and Mr. Joe are the beneficial owners of Company LDK through indirect ownership.

[Diagram: Company LDK Ltd (Customer) — 50% → Company ROP Ltd — 100% → Mr. Guy; Company LDK Ltd — 50% → Company LAMN Ltd — 25% → Company JM Ltd — 100% → Mr. Os; Company LAMN Ltd — 60% → Company KRM Ltd — 100% → Mr. Joe; Company LAMN Ltd — 5% → Mrs. Chloe; Company LAMN Ltd — 10% → Company TYRs Ltd — 100% → Mr. Mc]

### B. Illustration of effective Control through Position

[Diagram: Company A — CEO → Mr. X; Company A — 20% → Person 1, 20% → Person 2, 20% → Person 3, 20% → Person 4; Company T — 100% → Mr. Y]