Anonymised, illustrative composite. A numbered corporation's declared ownership structure kept every shareholder just under FINTRAC's 25% threshold. An independent confirmation step found the real owner underneath it.
At a glance
A numbered Ontario corporation offered $1,200,000 for a commercial retail property, with a $60,000 deposit and a single named director signing the offer. The corporate documents supplied at the outset listed four shareholders, each holding 24.9% of the company.
Nothing about the offer itself looked unusual — a numbered company buying commercial real estate is a routine structure, and the listing agent had no particular reason to distrust the paperwork on its face. The corporate documents were internally consistent and properly executed.
FINTRAC’s beneficial-ownership rule sets the identification threshold at 25%: an individual who “directly or indirectly own[s] or control[s] at least 25% of a corporation.” On paper, this cap table cleared that bar cleanly — four shareholders, none above 24.9%, none individually requiring identification as a beneficial owner under the strict letter of the threshold.
A cap table engineered so that every holder sits just under a legal threshold is not, on its own, proof of anything improper — but it is exactly the shape FINTRAC’s own guidance anticipates when it requires more than simply collecting what a client discloses.
Purchase price $1,200,000. Deposit $60,000 (5%). Declared shareholding: four holders at 24.9% each, totalling 99.6% of the corporation. On a first pass, none individually crossed the 25% threshold that triggers identification as a beneficial owner.
A corporate registry cross-check, done as a confirmation step separate from the client’s own disclosure, found that two of the four named shareholders were in fact holding their shares as nominees for the same underlying individual — combining their 24.9% holdings into a real, indirect 49.8% interest for that one person.
FINTRAC’s guidance draws a firm line between collecting beneficial-ownership information and confirming it: the reporting entity must take reasonable measures to confirm the accuracy of what it is given, and — the operative detail here — the confirmation method “cannot be the same” as the method used to obtain the information in the first place. Acceptable confirmation approaches include reviewing official documentation, consulting a corporate or beneficial-ownership registry, or a client attestation.
The 25% test itself captures indirect as well as direct ownership or control — which is precisely how two nominee holdings, each under the line on its own, combine into a real beneficial interest that crosses it. A cap table that simply repeats what the client says, checked no differently than it was collected, would never have surfaced the nominee arrangement.
Once the registry cross-check identified the nominee relationship, the brokerage required a proper beneficial-ownership declaration naming the true controlling individual behind the combined 49.8% interest, and completed identification for that person specifically. The deal proceeded once that step was satisfied.
Nothing in the outcome assumed wrongdoing. Nominee shareholding arrangements exist for entirely legitimate reasons — estate planning, family income splitting, creditor-proofing — and FINTRAC’s rule does not treat the arrangement itself as suspicious. It simply requires the real controlling individual to be identified once the 25% test is met, whatever the underlying reason for the structure turns out to be.
For the underlying rule, see the beneficial ownership glossary entry, and for the broader identification framework it sits inside, the know-your-client glossary entry. For a related fact pattern involving who actually supplies the funds on a deal, see a third party paying someone else’s deposit.
Relying solely on the client’s own cap-table disclosure, and calling that disclosure its own confirmation, would have failed FINTRAC’s explicit requirement that the confirmation method differ from the collection method — a structural compliance gap distinct from simply missing a beneficial owner by mistake. The corporation’s own paperwork, taken at face value, would have cleared every shareholder from identification even though a single individual actually controlled just under half the company.
The tell was the shape of the cap table itself: four shareholders clustered suspiciously close to, but under, a known 25% threshold is a pattern worth independently confirming on its own, before any nominee relationship is even suspected. A cap table where every holding lands just under a legal line is exactly the fact pattern FINTRAC’s confirmation-method rule was built to catch.
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