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Corporate Register

A Corporate Register is an official database or repository that records essential information about companies and other legal entities incorporated within a jurisdiction.

It typically includes details such as company name, registration number, date of incorporation, registered address, directors, shareholders, and beneficial owners.

Maintained by a government authority or designated registrar, the corporate register serves as the primary source of verified corporate data for legal, financial, and compliance purposes.

Purpose & Function

The main function of a corporate register is to provide transparency and accountability in business operations.

It ensures that companies operating within a jurisdiction are identifiable and can be held legally responsible for their actions.

Regulators, financial institutions, and law enforcement agencies often rely on corporate registers to perform due diligence, identify ultimate beneficial ownership (UBO), and detect potential links to illicit financial activity.

In the context of anti-money laundering (AML) and countering the financing of terrorism (CFT), corporate registers are instrumental in mitigating the misuse of corporate vehicles such as shell companies or complex ownership structures that can obscure the true ownership of assets and transactions.

Corporate Registers in AML Compliance

Corporate registers are a foundational tool in the fight against financial crime. They support:

  • Customer Due Diligence (CDD): Financial institutions use corporate register data to verify the identity of corporate clients and their beneficial owners.
  • Transparency and Disclosure: Registers promote public access to ownership information, aligning with global transparency initiatives led by organizations such as the Financial Action Task Force (FATF).
  • Cross-Border Investigations: Investigators and regulators rely on corporate register data when tracing cross-jurisdictional ownership or investigating cases of tax evasion, fraud, or money laundering.
  • Risk Assessment: The data enables entities to evaluate the legitimacy of business relationships and identify potential red flags related to high-risk jurisdictions or politically exposed persons (PEPs).

Challenges & Limitations

Despite their importance, corporate registers face several challenges:

  • Incomplete or Inaccurate Data: Some jurisdictions do not mandate regular updates, resulting in outdated or false ownership information.
  • Limited Access: While many countries have public registers, others restrict access to certain government agencies or impose fees, limiting transparency.
  • Inconsistent Standards: The lack of uniformity in data collection and disclosure requirements across jurisdictions complicates global compliance and cross-border investigations.
  • Privacy and Legal Barriers: Balancing data privacy with transparency remains a persistent challenge, particularly under stringent data protection laws like GDPR.

Global Initiatives & Best Practices

Efforts to strengthen corporate registers are ongoing.

The FATF and the European Union have both emphasized the need for central beneficial ownership registries accessible to competent authorities.

The EU’s Fifth and Sixth Anti-Money Laundering Directives (AMLD5 and AMLD6) require Member States to establish such registers.

Similarly, the United Kingdom’s Companies House has been reformed to verify company data more rigorously, enhancing its reliability for AML purposes.

The World Bank and the OECD also promote the development of beneficial ownership registers to prevent corruption and financial crime.

In the United States, the Corporate Transparency Act (2021) mandates that companies report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), creating a centralized federal register.

Practical Application

Compliance officers and AML analysts routinely use corporate registers during onboarding, enhanced due diligence (EDD), and ongoing monitoring.

Data retrieved from these registers assists in:

  • Verifying client legitimacy and ownership structures.
  • Detecting nominee arrangements or layered company setups.
  • Identifying potential links to sanctioned individuals or entities.
  • Supporting Suspicious Activity Report (SAR) filings with credible ownership information.

Related Terms

  • Beneficial Ownership
  • Corporate Transparency
  • Companies House
  • Beneficial Ownership Register
  • Customer Due Diligence (CDD)
  • Know Your Customer (KYC)
  • FATF Recommendations
  • Shell Company

References

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