Complex structures – what triggers complexity – what is your definition?
A UK impact assessment on beneficial ownership from 2014 agreed with the risks created by complexity, suggesting that trusts and foreign entities add complexity.
The study’s classification was as follows:
- “‘Simple’ with 0-1 layers in the ownership chain;
- ‘Reasonably complex’ with 2-3 layers of ownership (UK-owned, no trusts in the ownership chain); and
- ‘Complex’ with over 4 layers and/or foreign ownership.”
The next figure shows an online poll of more than 100 compliance officers from banks and other financial institutions from Latin America who were surveyed about factors they considered would add risk to a structure.
The factors included the presence in the ownership chain of:
- A legal vehicle from a secrecy jurisdiction,
- A foreign trust,
- An “exotic” entity (e.g. Anstalt), and
- A high number of layers (>1, >2, >3, >5, >7, >20)
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