Beneficial Ownership Disclosure: the Georgian Statutory Regime
The Georgian statutory regime for beneficial-ownership disclosure lives in the law on the prevention of money laundering and terrorism financing: Article 13 governs the concept and identification, Articles 21 and 19 the special risk categories, and Article 18 the disclosure instrument — enhanced preventive measures. One corpus, four distinct angles.
The practical meaning for a company is simple: identifying the beneficiary is not just a form — it begins with applying the 25 percent threshold and ends with establishing who holds ultimate control.
Who Is the Beneficial Owner
Under Article 13, the beneficial owner is the physical person who is the client’s ultimate owner or ultimate controller, and/or on whose behalf a transaction is prepared, concluded or executed. For a legal person, the beneficial owner is the physical person who directly or indirectly holds 25 percent or more of its shares or voting shares, or otherwise exercises ultimate control.
Direct ownership is the physical person’s own holding of 25 percent or more; indirect — ownership through a legal person controlled by that physical person. Where, after all possible measures, no beneficial owner can be established, preventive measures apply toward the client’s senior managing person. Where a trust or similar structure exists, measures apply to the trustee, settlor, protector, beneficiary and any other physical person exercising effective ultimate control.
Politically Exposed Persons
Article 21 defines a special category: a politically exposed person is a physical person performing significant public or political functions — head of state, head of government, minister, member of parliament, leader of a political association, member of the supreme courts, member of the central bank board, ambassador, head of the defence forces, head of an international organization, among others.
Where the client or its beneficial owner is a politically exposed person, the accountable person must obtain senior management’s permission to establish or continue the relationship, take reasonable measures to establish the origin of the person’s assets and funds, and conduct enhanced monitoring. The same measures extend to family members and persons with close business or other relations; after the function ends, effective measures for managing continuing risks remain.
High-Risk Jurisdictions
Article 19 governs the external risk factor: a high-risk jurisdiction is a country or territory whose prevention system has serious deficiencies. The list of such jurisdictions is approved and, as needed, amended by the National Bank on the proposal of the Service.
Persons located in high-risk jurisdictions face risk-, relationship- and transaction-proportional enhanced measures; the same applies to legal persons registered there, operations managed from there, and transactions executed through financial institutions located there. Exceptions are provided for Georgian citizens and foreign subsidiaries of Georgian financial-sector subjects.
A high-risk jurisdiction is a country or territory whose anti-money-laundering and counter-terrorist-financing system has serious deficiencies; the list of such jurisdictions is approved, and amended as needed, by the National Bank on the proposal of the service. Towards a person located in a high-risk jurisdiction, the obliged entity must apply preventive measures enhanced in proportion to the risk, the business relationship and the transaction.
Enhanced Preventive Measures
Article 18 describes the instrument itself: toward a client of increased risk level, the ordinary measures are supplemented by obtaining additional information on assets and activity, increasing the frequency of updating identification data, additional information on the purposes and grounds of transactions, senior-management permission, reasonable measures to establish the origin of assets and funds, and enhanced monitoring — by increasing the number and frequency of risk-management measures.
The list of enhanced measures is closed: obtaining additional information on the property and activity of the client or beneficial owner; increasing the frequency of updating identification data; additional information on the intended nature of the relationship and the purposes of transactions; senior management permission to establish or continue the relationship; reasonable measures to establish the origin of property, funds and convertible virtual assets; and enhanced monitoring, including an increased number and frequency of risk-management measures.
Frequently Asked Questions
Below are the most frequent questions about beneficial-ownership disclosure.
Which share creates beneficial ownership?
25 percent or more of shares or voting shares — directly or indirectly — or the other exercise of ultimate control.
What if the beneficiary cannot be established?
Where all possible measures fail, measures apply toward the person with senior managing authority.
Who is a politically exposed person?
A physical person performing significant public or political functions; their family members and close associates fall under the same regime.
What is a high-risk jurisdiction?
A country or territory with serious deficiencies in its prevention system; the list is approved by the National Bank.
What do enhanced measures include?
Additional information on assets and transactions, more frequent updates, management permission and intensive monitoring.
How We Help on Legal.ge
The lawyers of Legal.ge help you analyse ownership structures and determine the beneficiary correctly: we separate direct and indirect holdings, assess ultimate control, and prepare documentation that will withstand substantiation before the supervisory authority. Contact us — a correctly determined beneficiary is the pillar of the entire compliance structure.