Identifying Persons of Significant Control in Italian Fiduciary Arrangements

Executive Summary

The identification of the Ultimate Beneficial Owner (UBO) within a trust or similar legal arrangement is not limited to those with a financial interest. Italian law, implementing the Fourth and Fifth Anti-Money Laundering Directives, requires the identification of all "Persons of Significant Control" who exercise ultimate influence over the administration or the assets of the structure. Under Article 22, paragraph 5 of Legislative Decree 231/2007, this identification is cumulative and mandatory, natural person who possesses the power to direct the actions of the trustee or party holding the mandate.

The Cumulative Criterion of Beneficial Ownership

Unlike corporate entities where a 25% ownership threshold often applies, the identification of UBOs for trusts and similar arrangements follows a cumulative rule. The law dictates that the following natural persons must always be identified and registered:

1. The Settlor or Constituent.

2. The Trustee.

3. The Protector (if any).

4. The Beneficiaries or class of beneficiaries.

5. Any other natural person exercising ultimate control through direct or indirect ownership or by other means.

The fifth category—persons exercising ultimate control—is the most complex and requires a thorough analysis of the trust deed or fiduciary mandate to identify "Persons of Significant Control" who may not hold a formal title.

Mechanisms of Indirect Control

Significant control may be exercised through various legal or factual mechanisms. In the Italian regulatory context, the authorities look beyond the formal structure to identify the individual who has the power to:

- Appoint or remove the trustee or protector.

- Amend the trust deed or the terms of the fiduciary mandate.

- Veto or direct the investment decisions or distributions of the trust.

- Exercise control over an underlying company that holds the trust assets.

If an individual holds a "Letter of Wishes" that is de facto binding on the trustee, or if they possess a power of attorney that grants them management of the assets, they are likely to be classified as a Person of Significant Control. Failure to disclose such individuals constitutes an incomplete or false filing in the UBO Register.

The Role of the "Enforcer" and Supervisory Bodies

In purpose trusts or charitable structures, where there are no human beneficiaries, the role of the "Enforcer" or a supervisory body becomes the primary focus for the "control" criterion. Because these parties are contractually tasked with ensuring the trustee fulfills the trust's objectives, they possess the ultimate power to compel performance. Under Italian law, these individuals must be registered as UBOs in the Special Section, as they are the natural persons who ultimately "control" the arrangement.

Responsibility for Identification

The responsibility for identifying all Persons of Significant Control lies with the trustee or the person holding an equivalent position. The trustee must conduct rigorous due diligence to map the entire chain of control and ensure that every individual meeting the legal definition is reported to the Italian Chamber of Commerce.

Seek Professional Opinion

Identifying the natural person who exercises "ultimate control" in a complex, multi-layered structure requires specialist legal analysis. The legal team at PWJ Fiduciary Services, dual-qualified in England & Wales and Italy, provides expert assessments of deeds and control mechanisms to ensure absolute compliance with the Italian UBO framework.

Register a Trust or Arrangement

Once all Persons of Significant Control have been identified, utilized our secure portal to fulfill your registration obligations and protect your structure from the risk of fines.