How Fintech Is Making Life Easier for Businesses with Complex Ownership Structures

Businesses and individuals are free to set up ownership structures for their companies in any way they please. They can do this the simple way, where the proprietor and sole shareholder of a company is identical to its beneficial owner, or employ more complex structures, in which ownership is divided among several different companies and individuals.

While there are no financial hurdles to setting up a more complex ownership structure (outside of potential legal and incorporation fees), the financial services companies tasked with identifying the beneficial owner of a business will have to expend significant resources in order to do so.

The effort required to do so has effectively resulted in many traditional banks being unwilling to provide these kinds of services to companies with complex ownership structures. And for owners of these businesses, even if a traditional bank does agree to provide these services, the wait times that typically ensue can hamstring a company’s development.

There is an immense amount of paperwork involved when going down the traditional bank route, and it can be very easy to get bogged down in the bureaucratic mire. Traditional banks have a set way of going about things and it can be exceedingly difficult for them to adapt to unique cases posed by complex kinds of businesses.

What options do companies with complex ownership structures have then? Experts from new British fintech Payrow have shared with TechRound their tips on how to obtain adequate financial services for companies with non-traditional ownership structures.

What Are Complex Ownership Structures?

Complex ownership structures are often employed by companies that have a variety of international departments and subsidiary companies linked together in ownership chains. Companies of the sort tend to have a number of layers of leadership with corporate officers, shareholders and PSCs (Persons of Significant Control). These structures can make identifying ownership very difficult.

Here is an example of a complex ownership structure:


The above diagram shows a company with multiple levels of indirect ownership:

  • The blue boxes in the middle (AB, BC, and CD) are beneficiary companies.
  • Mr. B owns 36.5% of the company (50% x 73% = 36,5%).
  • Mr. D owns 50% and Mrs. C owns 9%.
  • Mrs. C has both direct and indirect interests in the EFG Group.

A Data-Inspired Approach to Calculating Ultimate Beneficial Ownership

For many financial organisations, parsing out the details can be a toilsome task. Normally, it takes a long time to manually determine specific ownership identities (financial institutions have to check all the relevant information like the company name, address, registration details), verify the ownership breakdown (the different levels of ownership and financial reports from each level), and, when necessary, conduct EDD. To certify beneficial ownership, compliance teams, which often work in disconnected jurisdictions, have to pore through multiple reports and spreadsheets, as well as massive amounts of online data. Reports provided by a company can be inaccurate and are often specific to the company in question, making them difficult for a compliance team to adapt.

For example, the traditional ownership identification approach is problematic when looking at an indirect shareholding scenario, as there are at least two separate entities with 50% shares, rather than an overarching ownership entity. In order to make a successful ownership identification, the compliance team has to untangle the web of global corporate ownership and personal share distribution. To do this a company has to be able to effectively analyse and verify a wide variety of data. Unfortunately, however, not all businesses are capable of doing this.

Solutions for Businesses with Complex Ownership Structures

Despite there being a significant number of companies with complex ownership structures, there is a lack of services on the market that can provide adequate financial assistance for this sector. Not just large traditional banks, but even a lot of modern fintech companies are often not capable of working with companies with such ownership structures, understanding divided beneficiary chains, and parsing through the significant amount of data that comes with the process. Typically, financial services do not have the technical capability to add several owners, which precludes these kinds of businesses from receiving the necessary assistance from the get-go.

But not everything is as dire as it might seem at first glance, as fintech is developing rapidly and new platforms are appearing that can provide a variety of services and are ready to work with even the most complex cases.

For example, Payrow has announced financial services support for businesses with complex ownership structures. Leveraging its strong market experience, Payrow is now ready to onboard businesses with complex ownership structures in the United Kingdom. With a team of experts specialising in dealing with such businesses and strong KYC processes, Payrow can efficiently upload the required number of beneficiaries during business registration and easily offer all the necessary banking services from day one.

According to Dinu Popa, Head of Compliance and MLRO at Payrow, business needs in our markets are constantly changing, and Payrow is perfectly equipped to support complex ownership structures. With the new service, these businesses don’t have to jump through so many hoops and work through endless paperwork trails. Payrow’s exceptional ability to work with complex ownership stems, firstly, from the team’s extensive experience in working with large corporate structures. Secondly, unique
onboarding technology facilitates breaking down complex structures, and, with the help of best-in-class identity verification providers, securing compliant onboarding. Lastly and perhaps most important, is the personal touch of a dedicated complex structures team being there for customers at all times with answers and expert knowledge.

While it may seem like businesses with complex ownership structures are stuck between a rock and a hard place when trying to find the right financial service, the truth is that the fintech sector has made significant progress in assuaging many of the problems previously facing these companies. Given the technology advancement in the sector, now it is just a question of finding a trustable and reliable service that is capable of adapting to the needs of your business and processing the necessary data.


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