Who the counterparty is: the provenance file every party in the chain must be able to produce.

Every regulated person that touches a structure must know who it is dealing with: the identity of each holder and of the persons who own and control it, the origin of the money each holder subscribes, the identity of each seller of a position and the origin of what it sells, and whether any of them is a person the regimes prohibit dealing with. The obligation is the anti-money-laundering rule in each jurisdiction, and it falls on each regulated person separately: the manager in the centre, the administrator, the licensed distributor in each state, the lender, the onshore bank, the onshore registrar, the counsel. Each must hold evidence of its own, or must hold a reliance on another's evidence that its own regime permits. A structure in which each party gathers the evidence itself, from each holder, in its own form, at its own time, is a structure whose holders are asked the same questions seven times and whose admission takes a quarter. A structure that designs the file once, to the strictest regime it touches, in a form each party's regime lets it rely on, asks once and admits in a week.

This note sets out what each party must establish, the obligations that fall on each, the file's contents, the strictest regime as the design standard, reliance and its conditions, the holder's side and the seller's side, the onshore bank and registrar, the lists and the checking of names, the ongoing obligation, the file's custody and the data rules, the lender's reading, a comparison, a worked file as a type, cases, what each party holds, the sequence, questions, terms and what to read.

What each party must establish

Identity: who the holder is, by documents the regime accepts, and who its beneficial owners and controllers are, to the threshold the regime fixes, by documents or by the holder's own regulated status. Origin: where the money the holder subscribes comes from, by explanation and evidence proportionate to the risk. Standing: whether the holder or any owner is on a sanctions list, is a politically exposed person, or is from a jurisdiction the regime treats as high-risk. Purpose: why the holder is subscribing, where the regime requires it. Each party must establish each, to its own regime's standard, before the relationship begins, and must keep the evidence for the period the regime fixes.

The obligations that fall on each

The manager in the centre is obliged under the centre's rules as the person that accepts the subscription. The administrator is obliged under its own licence, in the centre or elsewhere, as the person that records the holder. The licensed distributor in a state is obliged under the state's rules as the person that offered. The lender is obliged under its own regime as the person that lends against the commitments. The onshore bank is obliged under the state's rules as the person that holds the account. The onshore registrar requires beneficial ownership of the onshore company to be declared. Counsel in each place is obliged under its own professional rules. Seven obligations, seven regimes, one holder.

The file's contents

The file for a holder is: its constitutional documents and registration; its directors and authorised signatories; its ownership chart to the beneficial owners at the strictest threshold; identity documents for each beneficial owner and controller; the holder's own regulated status where it has one; the origin of the subscription's money, with bank evidence of the account it will come from; the results of name checks for the holder and every owner against the lists; the classification of risk and of any politically exposed status; the purpose of the subscription; and the date and the certifier of each document. The file for a seller of a position is the same with the position's own provenance: the seller's title, the origin of the seller's acquisition, and the seller's owners.

Why the obligation falls on each separately

The anti-money-laundering regimes were written for each regulated person's own relationship with its own customer, and each regime binds its own licensees. The centre's rules bind the manager because the centre licensed it; the state's rules bind the bank because the state licensed it; the lender's regime binds the lender. None of the regimes was written for a structure in which seven licensees share one customer, and none of them removes its own licensee's obligation because another licensee performed the work. What each regime offers is reliance, on conditions, which is the regime's concession to the structure; and reliance retains the relying party's responsibility, so that a failure in the file is each party's failure. The separateness is the regimes' design, and the structure's design is the reliance arrangement that makes the separate obligations one piece of work.

The ownership chart

The chart is the file's spine: the holder at the top, each layer beneath to the natural persons at the bottom, with percentages and the nature of control at each layer. A holder that is itself a fund has a chart that reaches its own holders above the threshold; a holder that is a trust has a chart of settlor, trustees, protector and beneficiaries; a holder that is a public body has a chart that ends at the state. The chart is built to the lowest threshold any regime in the structure applies, because a chart built to a higher threshold omits persons the onshore bank requires, and it is the document from which the registrar's declaration, the bank's form and each party's record are each completed.

The origin of the money

The origin is the part of the file holders resist and regimes read most. The evidence is proportionate to the holder's risk: a regulated institution's own regulated status and the account the money will come from; a family office's explanation of the wealth's origin with evidence of the principal's business or inheritance; an individual's employment, business or sale with documents. The subscription's bank account is named in the file and the money must arrive from it, and money arriving from another account is returned under most regimes until the account is added to the file. The origin question is asked once, by the administrator, in the form the strictest regime accepts, and the answer serves every party.

The strictest regime as the standard

The regimes differ in their thresholds for beneficial ownership, their lists, their treatment of politically exposed persons, their accepted documents and their certification requirements. A file built to the centre's regime and presented to the state's bank fails the state's threshold; one built to the state's and presented to the lender fails the lender's list. The structure lists every regime that will read the file and builds to the strictest element of each: the lowest ownership threshold, the widest list, the most demanding certification. A file built to the strictest standard is accepted by every party whose regime permits reliance, and the holder is asked once.

Reliance and its conditions

Most regimes permit a regulated person to rely on the customer due diligence performed by another regulated person, on conditions: that the other is regulated in a jurisdiction the regime recognises, that it agrees to provide the evidence on request, that the relying party obtains the identification information immediately, and that the relying party remains responsible for the outcome. Reliance is a contract between the parties and a record at each, and the structure's design is a reliance arrangement in which the administrator, as the party with the widest licence and the best record-keeping, performs the diligence to the strictest standard and every other party relies under its own regime's conditions. A party whose regime does not permit reliance performs its own, on the same file.

The holder's side and the seller's side

The holder subscribes and the file is built at subscription. The seller of a position sells to the onshore vehicle and the file is built at acquisition, by the onshore vehicle's counsel and bank and by the fund's manager, on the seller and on the position's provenance: the chain of title, the origin of the seller's own acquisition, and the seller's owners. A position acquired from a seller whose provenance was not established is a position the onshore bank may refuse to receive proceeds for at exit, and the buyer at exit reads the acquisition file as the position's provenance.

The transfer of units

A holder that transfers its units brings a new holder, and the new holder's file is built before the transfer is registered, because the administrator's register is the legal record and a transferee without a file is a holder the administrator cannot record. The transfer's timetable is the file's timetable, and a transferee that arrives at the transfer date without a file waits. The constitution's transfer provisions give the manager the consent right that holds the transfer until the file is complete, and the reliance arrangement covers the transferee as it covered the transferor.

The politically exposed person

A holder whose owner or controller holds or held a prominent public function is a politically exposed person under every regime, and the regimes require enhanced review: the origin of the wealth and of the money established with more evidence, senior management's approval of the relationship, and closer ongoing review. The status is common among Gulf holders, because the region's public and private wealth are close, and a structure that treats the status as a bar has no register; one that treats it as the enhanced procedure the regimes describe has a register whose files are thicker for those holders. The administrator's procedure for enhanced review is written to the strictest regime, and the manager's senior management approval is minuted.

The onshore bank and registrar

The onshore bank opens the onshore vehicle's account on the state's rules, which require the vehicle's beneficial owners through every layer to the fund's holders above a threshold, and the bank applies the state's lists and its own. The onshore registrar requires a beneficial ownership declaration for the onshore company at formation and on each change. Both read through the fund to its holders, and a fund whose holders' file was built to the centre's threshold and not the state's has a file the bank will not accept and a registrar's declaration that cannot be completed. The onshore column is the strictest in most structures, and the file is built to it.

The lists and the name checks

Each regime has lists: the international sanctions lists it adopts, its own national list, and its list of high-risk jurisdictions. A name check is the comparison of every name in the file against every list each party's regime adopts, at onboarding and periodically, with a record of each check, its date and its result. A name that matches is escalated, investigated and either cleared with reasons or declined. The union of the lists across the regimes is the structure's checking standard, and the administrator checks against it for every party that relies.

The ongoing obligation

The file is not built once. Each regime requires periodic review at a frequency by risk, refreshed evidence when documents expire or circumstances change, re-checking against the lists at intervals and on each list update, and enhanced review on a trigger: a change of owner, a politically exposed appointment, a transaction out of pattern. The administrator runs the reviews under the reliance arrangement and notifies each relying party of changes, and a holder whose file is three years old is a holder each party's regime reads as unverified.

Custody and the data rules

The file contains personal data of the holders' owners and controllers, and each jurisdiction's data rules govern its collection, its transfer across borders, its storage and its disclosure. The reliance arrangement transfers the file among the parties in several jurisdictions, and the transfers need a lawful basis under each regime: the holder's consent in the subscription documents, the regulatory obligation as a basis where the regime accepts it, and the safeguards for transfer to jurisdictions without adequacy. The file's custody is the administrator's under the arrangement, with access for each relying party, and the subscription documents carry the consents the transfers need.

The lender's reading

A capital-call lender relies on the administrator's diligence under its own regime's conditions and checks the holders against its own lists, because the commitments it lends against are the holders' and a holder the lender cannot deal with is a commitment it cannot count. The facility requires the manager to represent that each holder's file meets the standard and to notify the lender of any holder whose status changes, and the lender's exclusion of such a holder from the base is the facility's mechanism.

By party · by obligation	Regime	Must establish	Relies on	Keeps
The manager	The centre's rules	Identity, owners, origin, standing, purpose	The administrator, under the centre's reliance conditions	The reliance record
The administrator	Its own licence	The full file to the strictest standard	Nobody; performs	The file and the checks
The licensed distributor	The state's rules	Identity and classification of those it offers to	The administrator where the state permits	Its own record
The lender	Its own regime	Holders' identity and standing	The administrator, with its own name checks	Its record and its checks
The onshore bank	The state's rules	Beneficial owners through every layer	Rarely anyone	Its own file
The onshore registrar	The state's companies law	Beneficial ownership declaration	The declarant	The declaration
Counsel	Professional rules	Identity of its client and the client's owners	Another professional where the rules permit	Its own file

A file, as a type

A fund in a centre with holders from four jurisdictions, an administrator, licensed distributors in two states, a lender and onshore vehicles in one state with an onshore bank lists every regime that will read each holder's file and builds the standard from the strictest element of each: the onshore bank's ownership threshold, the union of the lists, the certification the lender's regime requires. The administrator performs the diligence to the standard under a reliance arrangement with the manager, the distributors and the lender, each under its own regime's conditions; the onshore bank performs its own on the same file. The subscription documents carry the holders' consents to the file's transfer among the parties and to disclosure to the onshore authorities. Each holder is asked once, in one form, and admitted in a week. The administrator re-checks on every list update and reviews by risk, and notifies the relying parties of changes. A politically exposed appointment at one holder's owner in year three triggers enhanced review, cleared with reasons, and the lender is notified and keeps the holder in the base. The onshore bank opened the account on the file in a month, and the registrar's declaration was completed from the same chart.

The structure paper's page

The structure paper carries a page on the file: the regimes listed with their thresholds, lists, documents, certifications and reliance conditions; the standard; the reliance arrangement's parties and terms; the form; the consents in the subscription documents; the custody and access; the review and re-check schedule; and the seller's file at acquisition. The page is written before the first subscription form is sent, and it is the page the anchor's compliance team and the onshore bank each read.

The onshore authorities' requests

The state's authorities may ask the onshore vehicle for the identity of its ultimate owners beyond what the registrar's declaration holds, in an investigation or a routine review, and the request reaches the fund's holders through the chart. The subscription documents' consent to disclosure to onshore authorities is what lets the manager answer, and a holder that gave no consent is a holder whose identity the manager cannot lawfully disclose and cannot lawfully withhold. The consent is drafted to every onshore jurisdiction the fund may enter, and the holder's own counsel reads it at subscription.

The second fund's reading

A manager's second fund is raised from holders whose files the first fund's administrator built, and the reliance arrangement lets the second fund's administrator rely on them with a refresh rather than rebuild them. The holders were asked once for the first fund and are asked for changes for the second, and the difference is the second raise's speed. A manager whose first fund's files were built to the strictest standard has files the second fund's onshore banks accept; one whose files were built to the centre's threshold rebuilds them. The file's design is an asset across funds, and the administrator's engagement provides for its use by the manager's later vehicles with the holders' consent.

Four cases, as types

A manager builds each holder's file to the centre's threshold and presents it to the onshore bank. The bank's threshold is lower, the file does not reach it, the account opening waits two months for the holders to be asked again, and the acquisition's completion date passes.

A fund's parties each perform their own diligence, in their own forms, at their own times. A sovereign holder is asked for its owners' identity documents by seven parties in four forms, declines the fourth request, and subscribes to another fund.

A file is built once and never reviewed. In year five the lender's own re-check finds an owner of a holder on a list added in year three; the holder is excluded from the base, the facility's availability falls, and the manager learns of the listing from its lender.

A file is built to the strictest standard under a reliance arrangement, reviewed by risk, re-checked on every update, and held by the administrator with access for every party. Each party's regime is satisfied by one file, and the holders were asked once.

What each party holds

The administrator holds the file, the checks and the reviews under the reliance arrangement.

The manager holds the standard, the reliance arrangement and its own regime's record.

The distributors, the lender and counsel hold their reliance records and their own checks where their regimes require.

The onshore bank and registrar hold their own files and declarations, built from the same chart.

The holders hold their consents and their obligation to notify changes.

Counsel in each place holds the regime's thresholds, lists, reliance conditions and data rules.

Where it surfaces

It surfaces at the subscription, when the administrator's form arrives and the holder's own compliance team reads it. It surfaces at the onshore bank's account opening, when the bank's threshold is lower than the file's. It surfaces at the registrar's declaration, when the chart does not reach the natural persons. It surfaces at the lender's base, when its own check finds a name. It surfaces at the acquisition, when the seller's provenance was not built and the bank holds the payment. It surfaces at the data rules, when a holder's owner objects to the file's transfer to an onshore authority. And it surfaces at exit, when the buyer's diligence asks for the provenance of the position and of the holders.

The cost of getting it wrong

A file built to the wrong standard costs a quarter at each party whose standard it does not meet, and the acquisition's completion date, and the holder's patience. A file not reviewed costs the listing nobody noticed and the lender's exclusion. A file without the consents costs the transfer the data rules forbid, and the onshore authority's question unanswered. The cost of the design is a list of regimes, a standard built from them, a reliance arrangement and a form, once.

The holder's own compliance

Institutional holders have compliance functions that read the manager's file request as a test of the manager: a request in one form, to a stated standard, with the reliance arrangement explained, is read as a manager that knows what it is doing; seven requests in seven forms are read as the opposite, and the holder's compliance function advises its investment team accordingly. The file's design is part of the raise, and the anchor's compliance team reads it before the anchor commits.

A timeline, as a type

Month one: the regimes are listed and the standard is built; the reliance arrangement is signed among the manager, the administrator, the distributors and the lender; the subscription documents carry the consents. Month two: each prospective holder receives one form, and the administrator builds and checks each file. Month three: the first close admits holders whose files are complete; the onshore bank opens the vehicle's account on the charts; the registrar's declaration is filed from the same charts. Month six: the acquisition's seller file is built by the onshore vehicle's counsel and bank before the money moves. Year two: the administrator's risk-based review refreshes expiring documents. Year three: a list update triggers a re-check, a politically exposed appointment is found, enhanced review clears it, and the lender is notified. Year seven: the buyer's diligence reads the holders' files and the position's provenance file and conditions nothing.

The sequence

1. Every regime that will read the file is listed, with its threshold, its lists, its documents, its certification and its reliance conditions.
2. The standard is built from the strictest element of each.
3. The reliance arrangement is signed: the administrator performs, each party relies under its own conditions, and the onshore bank performs its own on the same file.
4. The subscription documents carry the consents the file's transfers and disclosures need.
5. Each holder is asked once in one form, and the file is built and checked before admission.
6. The administrator reviews by risk, re-checks on each update, and notifies changes; the lender's base follows.

Questions a manager asks

Can a regulated holder be accepted on its status alone. Most regimes permit simplified diligence for a regulated person in a recognised jurisdiction, to its own identity; its beneficial owners are usually still required by the onshore bank.

What if a holder refuses to identify its owners. It is not admitted; a fund that admits a holder without owners admits a holder no onshore bank will accept through.

Who bears the cost of the file. The administrator's charge for diligence under its engagement, which the fund bears; the holders bear their own documents' cost.

How is a sovereign or a state institution handled. By the regime's rule for public bodies, which usually simplifies ownership and does not remove the name checks; the onshore bank's rule may differ and the file is built to it.

What about a seller that is an individual. The same file on the individual and the origin of the position, to the onshore bank's standard, before the acquisition's money moves.

How long are the files kept. The longest period any regime in the structure requires after the relationship ends, by the administrator, with each party's own record kept for its own period.

Terms used

Provenance file: the evidence of a holder's or a seller's identity, owners, origin of money, standing and purpose.

Beneficial owner: a natural person owning or controlling a holder above a regime's threshold.

Reliance: one regulated person's use of another's diligence under its regime's conditions, with responsibility retained.

Name check: the comparison of names against the lists each regime adopts, recorded.

Strictest standard: the file's design to the most demanding element of every regime that will read it.

Ongoing review: the periodic and trigger-based refresh and re-check each regime requires.

What to read

Each regime's anti-money-laundering rules on diligence, reliance, lists and records; the onshore bank's account-opening requirements; the registrar's beneficial ownership rules; the data rules in each jurisdiction; the reliance arrangement; the subscription documents' consents. On this site, the perimeter room under Jurisdictions, the ADGM conduct room and the KSA marketing room.