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The definition of nominee is pretty broad. Usually any nominee arrangement wouldn’t work.
CRS Commentary page 200… Paragraph E – Miscellaneous
Subparagraph E(1) – Account Holder
- Subparagraph E(1) defines the term “Account Holder” as the person listed or identified as the holder of a Financial Account by the Financial Institution that maintains the account. This is regardless of whether such person is a flow-through Entity. Thus, for example, if a trust or an estate is listed as the holder or owner of a Financial Account, the trust or estate is the Account Holder, rather than its owners or beneficiaries. Similarly, if a partnership is listed as the holder or owner of a Financial Account, the partnership is the Account Holder, rather than the partners in the partnership.
139. A person, other than a Financial Institution, holding a Financial Account for the benefit or account of another person as agent, custodian, nominee, signatory, investment advisor, intermediary, or legal guardian, is not treated as holding the account according to subparagraph E(1). Instead, such other person is treated as holding the account. For these purposes, a Reporting Financial Institution may rely on information in its possession (including information collected pursuant to AML/KYC Procedures), based on which it can reasonably determine whether a person is acting for the benefit or account of another person.
A nominee, as defined in the FATF Glossary, is a natural or legal person holding a role in a company as an agent acting upon instructions of a nominator who has a more substantive claim to control and/or ownership of the company. In many cases, the nominator is the beneficial owner of the company “Acting upon instruction” to become a guarantor when wanting payment.
A Nominee Shareholder exercises the associated voting rights according to the instructions of the nominator and/or receives dividends on behalf of the nominator. A nominee shareholder is never the beneficial owner of a legal person based on the shares it holds as a nominee.
Nominee arrangements describe a spectrum of related legal and informal devices, where a nominee is registered as a director or shareholder, ranging from situations in which the nominee is simply a “front” with no real connection with or knowledge or control of the company (a “signature for sale”), to circumstances in which the nominee plays a substantive and genuinely independent role in the company, e.g., when representing the interests of particular shareholders in a large composite publicly- listed company, or providing specific expertise on the board of a company.
Nominees may be de jure, often the product of a formal legal agreement with a TCSP, notary, lawyer or tax advisor, or they may be de facto, for example where the behaviour or conduct of a person makes them a nominee director in the eyes of the law.74 Nominee arrangements may also exist informally, without any form of (written) legal contract, Under the FATF Glossary definition, the nominee shareholder or director exercises the functions in the company routinely, subject to the direct or indirect instructions of the nominator; conversely, a delegation whereby the nominee exercises certain powers of the nominator (e.g., “in the name of” the nominator) on a one-off or non-routine basis, would under most circumstances, not qualify as a nominee relationship.
Under the Interpretive Note to Recommendation 24, countries are required to apply one or more of the following mechanisms to prevent and mitigate the risk of the misuse of nominees: transparency requirements, focused on company or beneficial ownership registries; licensing requirements for those acting as nominees (combined with disclosure requirements for their nominators); or prohibition of nominee arrangements. These measures are applicable irrespective of whether the nominator, nominee shareholder and/or nominee director are legal or natural persons. The features of each mechanism are outlined below:
- a) Transparency Requirement:
- Nominee shareholders and directors must disclose that they are acting as a nominee (i.e., their nominee status) and the identity of the nominator upon whose instructions they are acting to the company.
