Beneficial Ownership and Corporate Discrepancies

Identify the people behind the entity

A corporation can own a life policy, but its registered name does not reveal who ultimately owns or controls it. Beneficial ownership requirements help identify natural persons behind legal structures and understand how the entity is controlled.

Under FINTRAC's applicable rules, obtain required beneficial ownership information when verifying an entity's identity. This is distinct from identifying the person who signs the application. A director, employee or authorized attorney can act for the entity without personally owning it.

For corporations, obtain the names of all directors and the names and addresses of persons who directly or indirectly own or control at least 25% of the shares or units. The threshold is at least 25%, so a person with exactly 25% is included.

Other entity structures

• For an ordinary trust, obtain names and addresses of trustees and all known beneficiaries and settlors. Do not substitute the corporation's 25% share test for every trust participant. Widely held or publicly traded trusts have their own prescribed information requirements.

• For entities other than corporations or trusts, the relevant requirement includes persons who directly or indirectly own or control at least 25% of the entity. In all cases, obtain information establishing ownership, control and structure.

• When a not-for-profit entity is involved, also determine its relevant charity or public-donation status under the guidance. “No shareholders” does not mean there is no information to collect or no control structure to understand.

Direct and indirect ownership

Trace ownership through intermediate entities to the natural persons where applicable. Suppose a holding company owns 80% of an operating company and an individual owns 50% of the holding company. Simple indirect ownership is 80% × 50% = 40%, above the 25% threshold.

That arithmetic is an illustration, not a complete control test. A person may exercise control through agreements or other rights even where a simple share multiplication does not reach the threshold. Obtain enough information to understand the real structure.

Record all qualifying persons, not just the first one found. If four individuals each own 25%, all four meet the percentage test. If no person reaches the threshold, document the information and reasoning rather than inventing a qualifying owner.

Obtain and confirm accuracy

Information can come from the entity, official documents, registries or other appropriate sources. FINTRAC requires reasonable measures to confirm the accuracy of the information obtained. Simply recording an unexamined assertion is not the entire process.

Possible measures include reviewing ownership registers, shareholder agreements, trust deeds or suitable registry information. The measures used to confirm accuracy must be distinguishable from merely obtaining the information. FINTRAC also recognizes an appropriate signed confirmation of previously obtained information.

Apply measures proportionate to risk and complexity. A complex structure requires enough work to understand it, but complexity alone does not automatically classify every entity as high risk. Consider the business purpose, jurisdictions, ownership transparency, transactions and other relevant indicators.

The obligation to obtain and confirm beneficial ownership information is not a blanket requirement to apply a prescribed personal identity method separately to every beneficial owner in every case. Do not confuse information confirmation with the distinct identity verification duties.

When information cannot be obtained or confirmed

If the required information cannot be obtained or its accuracy cannot be confirmed through reasonable measures, apply the prescribed fallback. Current FINTRAC guidance requires reasonable measures to verify the identity of the chief executive officer or person performing that function, together with treating the entity as high risk and applying special measures.

This is different from automatically stopping every transaction in every case. Other legal prohibitions, sanctions or suspicious-transaction concerns may require separate action. Escalate through the compliance process and document what was attempted, what remains missing and what measures were applied.

A finding that no natural person reaches 25% is also different from inability to understand the ownership. Reliable evidence of dispersed ownership can support the former; refusal to provide information can create the latter.

Federal corporate discrepancy reporting

From October 1, 2025, the applicable rules add consultation and discrepancy duties for high-risk corporations incorporated under the Canada Business Corporations Act. Consult Corporations Canada's individuals-with-significant-control database as required and compare it with the beneficial ownership information obtained.

A material discrepancy is a significant inconsistency affecting identification of ownership or control. A spelling variation, a permitted service address or information lawfully withheld from the public is not automatically material.

Report a material discrepancy to Corporations Canada within 30 days after identification. If it is resolved within that 30-day period, it need not be reported. Reporting can occur earlier; the rule is not an instruction to wait until the final day. Keep the required acknowledgement record.

Do not apply that specific federal-corporation duty as though every provincial corporation or low-risk entity has the same mandatory reporting trigger. Other beneficial ownership requirements still apply independently.

Practical file and source checkpoint

Keep entity verification details, directors, qualifying owners, structure, confirmation measures and applicable updates. Preserve reasons for a high-risk classification and any discrepancy decision. A corporate registry search is part of the evidence, not a universal replacement for understanding the client.

FINTRAC's current beneficial ownership guidance explains the information, fallback and October 2025 discrepancy requirements. Follow the current rule rather than an older summary using different fallback terminology.