LBR ¦ Circular LBR 26/01 Beneficial Owners of a Company Held by a Trust or a Foundation

Luxembourg clarifies beneficial ownership reporting where companies are held by trusts or foundations

Luxembourg Business Registers (LBR) has clarified how companies subject to the Beneficial Owners Register (Registre des bénéficiaires effectifs, or RBE) must identify and report their beneficial owners when ownership is held through a trust or foundation.

The guidance is particularly relevant to anti-money laundering controls because trusts and foundations can separate legal ownership, economic benefit and effective control across several individuals. That separation may complicate the identification of the people who ultimately benefit from, direct or control a corporate structure.

The company remains responsible for identifying its beneficial owners

A company covered by Luxembourg’s modified Law of 13 January 2019 establishing the Beneficial Owners Register is responsible for conducting the necessary enquiries and ensuring that accurate information is submitted to the register.

The beneficial owners must be natural persons. The company cannot discharge this responsibility by recording only the trust, foundation, corporate shareholder or another legal arrangement. It must trace the ownership and control structure to the individuals who ultimately own or control the company.

The starting point is the beneficial ownership definition in Article 1(7)(a) of Luxembourg’s modified Law of 12 November 2004 on the fight against money laundering and terrorist financing. This covers any natural person who ultimately owns or controls the company through direct or indirect ownership of a sufficient percentage of shares, voting rights or an ownership interest. Control through other means must also be considered.

If the company’s enquiries do not identify a natural person who meets this test, its senior managing official or officials (SMOs) must be registered as beneficial owners. This fallback does not remove the need to investigate the structure. It applies only after reasonable and appropriate enquiries have been carried out.

Bastian Schwind-Wagner _Follow

"Luxembourg Business Registers has clarified that companies held by a trust or foundation must generally report the natural persons connected to the underlying legal arrangement. This includes settlors, trustees, protectors, beneficiaries or relevant beneficiary categories, and anyone else exercising ultimate control.

The clarification is significant for anti-money laundering compliance because trusts and foundations can obscure ownership, control and the flow of proceeds derived from predicate offenses. Companies must therefore examine the full structure, identify all relevant individuals and keep the Beneficial Owners Register information accurate and up to date."

Trust and foundation structures require a different analysis

Where the company is held by a trust or foundation, Luxembourg Business Registers takes the position that the individuals to be registered are the beneficial owners of the underlying trust or foundation.

The analysis therefore moves beyond the company’s immediate legal owner. It focuses on the natural persons identified by the beneficial ownership provisions applicable to legal arrangements and entities of this type.

For a trust, the relevant individuals will generally include the settlor or settlors, the trustee or trustees, and any protector. Beneficiaries must also be identified. Where the beneficiaries have not yet been determined, the company should report the category of persons in whose main interest the trust or other legal arrangement was established or operates.

The register must also include any other natural person who exercises ultimate control through direct or indirect ownership or through other means. This category is important where control is exercised through reserved powers, decision-making rights, contractual arrangements or other features that may not be apparent from the ownership chain alone.

A foundation requires the same focus on the individuals who ultimately benefit from or control it. The precise persons will depend on the foundation’s governing documents, purpose, decision-making arrangements and applicable legal framework. A formal title is not, by itself, decisive. The relevant question is who ultimately has ownership, control or benefit within the meaning of the anti-money laundering rules.

Why the distinction matters for money laundering risk

Trust and foundation structures are legitimate in many contexts, including succession planning, charitable activity, asset protection and private wealth management. They can also create opacity that criminals may exploit to conceal proceeds, distance themselves from assets or disguise control over a company.

The underlying predicate offense is central to this assessment. Money laundering generally involves dealing with, converting, transferring, concealing, disguising or using property derived from criminal conduct. The underlying criminal conduct may include fraud, corruption, tax offenses, drug trafficking, human trafficking, sanctions evasion, cybercrime or other offenses capable of generating illicit proceeds.

A company held through a trust or foundation can be used to acquire assets, receive payments, hold investments, issue invoices or move funds between jurisdictions. If the people connected to the trust or foundation are not properly identified, the structure may obscure both the source of wealth and the person who controls the assets.

Beneficial ownership reporting therefore serves more than a registration function. It supports customer due diligence (CDD), transaction monitoring, suspicious transaction analysis and investigations into the movement of criminal proceeds. It can also help establish links between a corporate vehicle, the individuals benefiting from it and the predicate offense that generated the relevant funds.

Beneficiaries and control must be assessed carefully

Beneficiaries should not be treated as a purely administrative category. A beneficiary may have a fixed entitlement, a discretionary interest, a contingent interest or another form of economic benefit. The company should examine the trust deed, foundation statutes, letters of wishes where relevant, distribution provisions and any arrangements that affect who can benefit.

The absence of a named beneficiary does not end the analysis. Where the individuals who will benefit have not yet been determined, the relevant category of persons must be registered. This prevents uncertainty about future beneficiaries from creating a gap in the ownership and control record.

Control must also be assessed separately from economic benefit. A person may control a trust, foundation or company without receiving distributions. Conversely, a person may benefit economically without having authority over management or assets. Both dimensions are relevant to identifying the individuals who must be reported.

Particular attention should be paid to powers held by protectors, reserved powers retained by settlors, appointment and removal rights, veto rights, investment powers, distribution decisions and arrangements that give a person practical influence over the company or the underlying legal arrangement.

Information required for the register

The information to be reported includes each beneficial owner’s surname and first name, nationality, date and place of birth, country of residence, precise private or professional address and the nature and extent of the beneficial interest.

For individuals registered in Luxembourg’s National Registry of Natural Persons, the relevant national identification number must also be provided. A foreign identification number is required for non-residents who are not registered in that national system.

The nature and extent of the interest should accurately describe the person’s connection to the structure. Depending on the circumstances, that may include the person’s status as settlor, trustee, protector, beneficiary, member of a defined beneficiary class or individual exercising ultimate control. A generic description may not adequately reflect the actual arrangement.

Accuracy is particularly important where several individuals hold different roles. Recording only one person, such as the trustee, may produce an incomplete picture if the settlor, protector, beneficiaries or other controllers also fall within the applicable definition.

Alignment with forthcoming European rules

The approach is consistent with Article 55 of Regulation (EU) 2024/1624, adopted on 31 May 2024 as part of the European Union’s anti-money laundering framework. Although the regulation is not yet mandatory, its principles provide useful guidance for interpreting beneficial ownership in structures involving trusts and similar legal arrangements.

The broader direction of European policy is clear: beneficial ownership analysis must look through formal legal ownership and identify the natural persons connected with ownership, control and benefit. Structures that distribute these elements among several parties require a corresponding assessment of each relevant role.

Practical consequences for regulated firms and companies

Companies should review any ownership structure involving a trust or foundation and confirm that the underlying legal arrangement has been analysed rather than merely recorded as the shareholder.

They should also ensure that their corporate records, beneficial ownership filings and anti-money laundering files tell the same story. Differences between the information held by the company, its service providers and the Beneficial Owners Register can create regulatory concerns, particularly where the structure involves high-risk jurisdictions, complex asset flows, politically exposed persons (PEPs) or unexplained wealth.

The review should be refreshed when the trust deed, foundation statutes, beneficiaries, trustees, protectors, governing body or control arrangements change. Changes in distributions, appointments, voting rights or reserved powers may alter the beneficial ownership analysis even where the company’s registered shareholder remains unchanged.

Where information is incomplete or contradictory, the company should not rely on assumptions. It should obtain and assess the relevant constitutional and ownership documents, clarify the roles of the individuals involved and document the reasoning supporting the filing.

A transparent ownership record supports effective enforcement

The clarified approach reinforces a basic principle of financial crime prevention: legal ownership is only one part of the analysis. The people who establish, administer, control or benefit from a trust or foundation may all be relevant to understanding who stands behind a company.

Accurate registration can help expose the connection between corporate assets, individuals and illicit proceeds. It can also assist authorities and financial institutions in tracing transactions back to the people who may have benefited from, directed or facilitated conduct linked to a predicate offense.

For companies held through trusts or foundations, beneficial ownership compliance should therefore be treated as a substantive ownership and control exercise, not as a form-filling obligation.

Dive deeper

• Luxembourg Business Registers (LBR) ¦ Circular LBR 26/01 - Beneficial owners of a company held by a trust or a foundation ¦ Link
• Journal officiel du Grand-Duché de Luxembourg ¦ Loi du 12 novembre 2004 relative à la lutte contre le blanchiment et contre le financement du terrorisme ¦ Link
• CSSF ¦ Law of 12 November 2004 (consolidated version) on the fight against money laundering and terrorist financing ¦ Link
• EUR-Lex ¦ Regulation (EU) 2024/1624 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing ¦ Link