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16 August 2016

People of significant control: significant but only part of the picture

Content team

Today we're introducing information on "people of significant control" (PSCs) into British company records.

This adds another dataset to our already well established offering for corporate ownership research, an area we at Bureau van Dijk are continually developing to deliver added value and help our users approach certainty.

Our move complements and ties in with efforts made by the British government to gather this type of information into a PSC register as part of its new "check and confirm process". This feeds into the beta version of its Companies House database, and we're using its open-source API to pull data into our services.

Respected anti-corruption NGO Global Witness describes the government's work as a bold step. We also applaud this drive for transparency, the first taken by any national government.

But the Global Witness blog also highlights some "wrinkles" in the currently incomplete service, and draws attention to some of the issues – some of them no doubt innocent mistakes – that arise from data being entered by companies themselves.

So it's important that the information isn't viewed in isolation.

The influence of AML 4

Under the EU's third anti-money laundering directive (AML 3), researchers concerned themselves only with beneficial owners, broadly defined by the EU as natural persons owning 25% or more of a company. (Definitions differ in other contexts.)

But its fourth anti-money laundering directive (AML 4) has expanded the EU's definition to include people of significant control. Examples of PSCs include CEOs, CFOs and chairmen.

The UK government's move appears to be in response to AML 4, which is close to implementation.

Governments of member states must incorporate it into their national laws by 26th June 2017, meaning other countries are likely to follow suit with similar initiatives, which we'll pick up on and reflect in our databases.

In Europe there are no limits to the scope of the PSC definition, hence our drive to give users the biggest possible picture when looking at all types of ownership.
It remains to be seen whether some companies will try to deceive the authorities by entering innocuous directors' names as PSCs, rather than the more traditional types of owner they might have been compelled to enter in the past and whose identities they're keen to hide. On balance, transparency is likely to improve across the board. But comparing datasets will be an interesting future exercise.

The wider ownership context

Corporate ownership is a complex area of compliance. Researchers must consider factors such as:

  • Lines of ownership and calculating percentage shares;
  • Establishing links between organisations, given the prevalence of shell companies in some structures, the availability of data, and the dead-ends you might face; and
  • Definitions and concepts around different types of ownership.

We've written a number of big pieces on beneficial ownership, and we've lined up a number of pieces of explanatory content in our pipeline, looking at that topic from other angles, at the overlapping issue of controlling ownership, and at the bodies and laws influencing these areas of compliance and due diligence.

Whether the issue of true ownership is cropping up in the Panama Papers revelations or in cross-border property ownership investigations, it's become an increasingly prominent part of the news agenda.

And it's complicated stuff.

The value of Bureau van Dijk's databases

Our databases show different types of ownership information, so we can help users join the dots with that which:

  • Falls beyond national shores;
  • Is sourced by third parties, so not entered by companies themselves; or
  • Isn't freely available.

This increases the accuracy of users' conclusions, tying in with our aim to provide the most certain and coherent source for ownership – and general company – research.

Let's see what direction AML 4 takes us in.

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Content team, Bureau van Dijk

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How Bureau van Dijk can help you

Certainty is a highly-prized commodity in business. Data might be getting bigger all the time, but this only makes extracting value from it more difficult.

In capturing and treating private company information we aim to give you more certainty – and help you make better decisions and work more efficiently.



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