When your client is owned by another company, the CDD note must follow the ownership up through each company, by name and registration number, until it reaches a natural person, a company listed on a regulated market, or a point where the record runs out. It must say which of the three it reached, quote the register for each step, and record what you did where the trail stopped. EntityWatch reads that chain from Companies House for you and writes it into the client note with the source and date for each layer. It is free for up to five companies.
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By Martin Nymann, AddonNordic ApS, the company behind EntityWatch. Updated 15 October 2026.
- What do the regulations require when a company owns your client?
- How do you trace the owners through a holding company?
- Where does the chain stop?
- Does a listed parent company mean you can stop?
- What must the CDD note show for a group structure?
- How does EntityWatch record the chain?
- Frequently asked questions
What do the regulations require when a company owns your client?
You must identify the individuals at the top and understand the structure in between. Regulation 28(3A) of the Money Laundering Regulations 2017 requires reasonable measures to understand the ownership and control structure of a corporate client. Regulation 28(4) adds that where the client is beneficially owned by another person, you must identify the beneficial owner, take reasonable measures to verify who they are, and, if that owner is itself a company, understand its ownership and control structure too.
The definition that tells you who you are looking for is in regulation 5: an individual who ultimately owns or controls more than 25% of the shares or voting rights, “whether directly or indirectly”, or who otherwise controls the company. “Indirectly” is the word that sends you through the holding company. The parent on your client’s register is rarely the answer. It is the next step.
One sentence in regulation 28 is easy to miss and matters more than most. Under regulation 28(9), you do not meet the duty to identify the beneficial owner by relying solely on what has been filed at Companies House (see what Companies House can and cannot evidence). The register is where the trail starts. Your note has to show that you looked at it, understood it and recorded anything that did not fit.
How do you trace the owners through a holding company?
Read one register page at a time and write down each step before you take the next one.
- Open the client’s PSC register. On Companies House, the “People” tab shows persons with significant control. If the entry is a company, note its name, registration number, the nature of control and the band of ownership exactly as listed.
- Follow the registration number, not the name. Group companies often share most of a name. The number is the only safe link between one layer and the next.
- Repeat on the parent’s register. Each UK company in the chain keeps its own PSC register, so each layer has a page of its own.
- Stop only for a reason you can write down. The reasons are covered in the next section. “It looked like a big group” is not one of them.
- Record what you did and where you looked. Name the page, the date you read it and what it said. If something on the register does not match what the client told you, it may be a material discrepancy you have to report under regulation 30A.
Here is what that looks like for a well-known group, read from Companies House on 15 October 2026:
| Layer | Company | Registration number | What its PSC register says |
|---|---|---|---|
| Client | Tesco Stores Limited | 00519500 | Controlled by Tesco Holdings Limited (00243011): shares 75% or more, voting rights 75% or more, right to appoint or remove directors |
| Parent | Tesco Holdings Limited | 00243011 | Controlled by Tesco PLC (00445790): shares 75% or more, voting rights 75% or more, right to appoint or remove directors |
| Top | Tesco PLC | 00445790 | “From 18 June 2018 the company is exempt from the requirement to obtain information of its PSC because it has voting shares admitted to trading on a UK regulated market” |
Three pages, three steps, and a stop point that the register explains in its own words. A file that only says “owned by Tesco PLC” skips the middle layer and the reason the trail ends.
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Where does the chain stop?
It stops in one of three places, and the note must say which.
- At a natural person. The register names an individual with more than 25% or with control. That is your beneficial owner, and you then verify their identity.
- At a company listed on a regulated market. Under section 790C(7) of the Companies Act 2006, a company with voting shares admitted to trading on a UK or EU regulated market is subject to its own disclosure requirements, and Companies House shows the exemption on its PSC page, as it does for Tesco PLC.
- Where the record runs out. The parent is registered outside the UK, the register holds a statement instead of a person, or no one passes the 25% threshold. Here the regulations do not let you stop quietly. Regulation 28(7) and (8) allow you to treat the senior person responsible for managing the client as its beneficial owner only after you have exhausted all possible means of identifying the real one, and you must keep written records of every action you took and every difficulty you met.
The third case is where most files fail. The trail ended, the file says nothing, and at inspection it reads as if nobody looked.
Does a listed parent company mean you can stop?
It means the chain stops, but it does not on its own settle what you record for your client. Regulation 28(5) lifts the beneficial-owner duties where “the customer is a company which is listed on a regulated market”. In the Tesco example, the customer is Tesco Stores Limited, which is not listed. Its parent’s parent is.
That difference should be visible in the note. Record that the chain ends at a listed company, quote the register’s exemption statement, and then record the decision your firm takes on that basis. Being part of a listed group can also be a lower-risk factor: regulation 37(3) lists a company whose securities are listed on a regulated market among the factors you weigh when deciding whether simplified due diligence is appropriate. Check how your supervisor’s guidance applies this to subsidiaries, and write down which approach you took and why.
What must the CDD note show for a group structure?
Enough for a reviewer to follow the chain without opening Companies House themselves.
- Every layer, from your client to the top, with company name and registration number.
- The nature of control at each layer, as the register states it, including the ownership band. Companies House publishes bands such as “75% or more”, not exact percentages, so write the band, not a figure you have worked out.
- The source and date for each step: which register, which page, read on which day.
- Where the chain stopped and why, in the register’s own words where it gives a reason.
- What you did where the record ran out, including any decision to treat the senior managing official as beneficial owner and the steps you took first.
- Anything that did not match, and whether you reported it as a discrepancy.
- Who reviewed and approved the note, and when. The approval is part of the record, as we cover in how to record an AML decision so it holds up at inspection.
This sits inside the wider client file described in the AML client file for accountants, and the chain should be checked again at each review, because a sale of the parent changes your client’s owners without anything changing at your client.
How does EntityWatch record the chain?
It reads the client’s PSC register, follows each corporate owner by registration number, and writes the chain into the ownership section of the note, layer by layer, with the band each company holds and the source and date for each read. Where the register records an exemption, the note quotes it word for word. Where the chain stops for any other reason, the note says where it stopped and why, and never claims the structure is complete. A listed company higher up the chain is kept separate from your client’s own beneficial-owner question, so the note does not treat a listed grandparent as a listed client.
You then review the note, set the risk class and approve it, and the approved version goes into the audit trail. For a UK client, how it works shows each step, coverage shows what is read in each country, and pricing shows the plans. Ongoing monitoring re-reads the register, so a change of parent shows up as a change, as explained in ongoing monitoring of clients.
Frequently asked questions
How far up a group structure do I have to go?
Until you reach an individual who owns or controls more than 25%, a company listed on a regulated market, or a point where the record runs out. Each step should be recorded with its source and date.
Is the Companies House PSC register enough on its own?
No. Regulation 28(9) says you do not meet the duty by relying solely on information filed at Companies House. Use it as the starting point, compare it with what the client tells you, and record anything that does not match.
My client’s parent is listed on the London Stock Exchange. Do I still need beneficial owners?
The chain stops at the listed company, but regulation 28(5) refers to a customer that is itself listed. Record the chain, quote the exemption shown on the register, and record the basis your firm applies to the subsidiary, following your supervisor’s guidance.
What if the parent company is registered outside the UK?
Record the parent’s name, country and registration number, what you checked in that country’s register and what you found. If you cannot identify a beneficial owner after exhausting all possible means, regulation 28(8) requires written records of every step before you may treat the senior managing official as beneficial owner.
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This article is general information, not legal advice.
This content was generated with artificial intelligence.