Control person

A control person is the individual with significant responsibility to control, manage or direct a business customer. Under the US Customer Due Diligence rule it is the second prong of the beneficial owner definition: "a single individual with significant responsibility to control, manage, or direct a legal entity customer," including an executive officer or senior manager such as a CEO, CFO, COO, managing member, general partner, president, vice president or treasurer, or anyone who regularly performs similar functions (31 CFR 1010.230(d)(2)).

Why it matters in KYB review

The ownership prong can legitimately return nobody: if no one holds 25% or more, there are no ownership-prong beneficial owners to list. The control prong always returns one person. That guarantees the institution has at least one accountable human on file for every legal entity customer. The rule's note is explicit: under the ownership prong up to four people may need identifying, and under the control prong only one (31 CFR 1010.230, note to paragraph (d)).

What an analyst checks

• Seniority and real authority. Does the title match someone who actually runs the business? An office manager is not a control person, even if they submitted the application.
• Consistency across sources. The named person should appear as an officer, director or manager in the registry, the formation documents or the operating agreement.
• Identity verification. The control person goes through the same identity checks as an individual customer.
• Screening. Sanctions, PEP and adverse media on the person, not only the entity.
• Signs of a front. A director with dozens of unrelated appointments, or one who appears to have no role in the business, may be a nominee director.

Common pitfalls

• Naming the applicant by default. The person who filled in the form is often an employee or an outside adviser.
• Picking a board member with no management role. The rule points at someone who controls, manages or directs.
• Confusing US and UK concepts. The UK "person with significant control" regime is a different test: among its conditions are holding more than 25% of shares or voting rights, or being able to appoint or remove a majority of directors (GOV.UK PSC guidance). A UK PSC register may therefore not name the person a US institution would record as its control person.
• Not refreshing it. Executives change. A departed CEO on file is stale beneficial ownership information. See KYB refresh.

Related terms

Ultimate beneficial owner, 25% ownership threshold, nominee director, KYB vs KYC.

How Sweat AI fits

Sweat AI's KYB reviews map ownership and control to named people and show the source for each link, so your analysts can see why a person was recorded as the control person. See KYB review.