Key takeaways
- Establish the legal entity before assessing the person presenting it.
- Beneficial ownership is the standard the regulated world works to, and it is about control, not job titles.
- Information should be verified against a source, not accepted as declared.
- Licence checks belong with the regulator that issued the licence, never with the counterparty.
3 minute read
The question behind every failed cross-border transaction we are asked to review is the same one: who was actually on the other side, and what did anyone check?
Start with the entity, not the person
A counterparty is usually met as an individual and contracted as a company. Those are different things, and the gap between them is where a surprising amount of loss occurs.
Every market Capital Africa researches has a companies registry. Establishing that the entity exists, in that jurisdiction, in the name being used, is the first check and the one most often skipped because it feels too basic to bother with.
Verified fact[1]
FATF Recommendation 24 provides that all companies formed in a jurisdiction should be registered in a company registry recording basic information and facilitating access by competent authorities, financial institutions and designated non-financial businesses and professions.
Capital Africa analysis
The practical version of this is simple. If you cannot name the registry that holds the entity, you do not yet know who you are dealing with, however many meetings have taken place.
Beneficial ownership is about control
The regulated world does not ask who signs. It asks who ultimately owns or controls, which is a deliberately harder question and the one that layered structures are built to obscure.
The standard also requires that the answer be capable of being checked, and that it be held in more than one place so a single interested party cannot be the only source of truth.
Verified fact[1]
Recommendation 24 requires countries to ensure competent authorities can obtain timely, adequate, accurate and up-to-date information on the beneficial ownership and control of legal persons.
Verified fact[2]
The standard contemplates beneficial ownership information being held across more than one source, such as a central registry alongside the company itself or a regulated service provider.
Verified fact[1]
The data is expected to be verified rather than merely declared.
Check the licence with whoever issued it
Mining, trading, export, transport and financial activity are licensed in these markets, and a licence document supplied by the counterparty is evidence of very little on its own.
The check is to identify the issuing regulator and confirm the licence with them. In every country we cover that regulator is named on the market briefing, which is why those pages exist.
Capital Africa analysis
A licence that cannot be confirmed with its issuer should be treated as absent, not as unconfirmed. The distinction matters because the second framing invites you to proceed while waiting, and waiting is where deposits get paid.
Requires further review
How responsive a given registry or regulator is to third-party enquiry varies widely, and this piece does not assess responsiveness market by market. Build time for it into the transaction schedule.
For minerals, there is a defined framework
Where the transaction involves minerals from a conflict-affected or high-risk area, counterparty verification sits inside a wider due diligence obligation that is already written down.
Verified fact[3]
The OECD guidance sets out a five-step, risk-based due diligence process covering policy, supply chain controls and red flags, risk management, third-party audit and public reporting.
Capital Africa analysis
Adopting the OECD structure even outside its strict scope is worthwhile. It gives a defensible record of what was checked and when, which is the thing most often missing when a transaction is examined afterwards.