A beneficial owner refers to the natural person who ultimately owns or controls a legal entity, such as a corporation, or who has a significant economic interest in a transaction. It is a term used in the context of anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations. The concept of beneficial ownership is important as it helps financial institutions and law enforcement to identify the individuals behind legal entities and track the flow of funds to detect any potential illicit activity. In some cases, the beneficial owner may not be the same as the legal owner listed in public records. The identification and verification of beneficial ownership information is a key component of AML/CFT compliance.

A beneficial owner is the person who ultimately owns or controls an asset, even if it's held under another name, such as through a nominee or legal entity. In finance, the beneficial owner receives the benefits (like dividends or interest) from an asset, though their name may not appear on official records.

For example, in stocks or bonds, a broker might hold the asset in their name for convenience, but the beneficial owner retains the rights and financial interests. Identifying the beneficial owner is essential for transparency in financial markets, combating money laundering, and ensuring proper tax reporting. Regulatory agencies often require the disclosure of beneficial ownership to prevent illegal activities like tax evasion or hiding illicit funds.