October 12, 2026

How to Build an Ownership Chart for a Multi-Layer Entity

Axle Team

Key takeaways

An ownership chart for a complex structure should be built as data (owner, owned entity, percentage, source, as-of date), not drawn as a picture. The picture is an output.
Under the CDD Rule you multiply percentages down each path and then add paths together for the same individual. FinCEN's own worked example produces a beneficial owner at 36⅔% who holds no single 25% path.
Do not prune a branch just because it is under 25%. The same person can appear in several branches.
OFAC's 50 percent rule uses different math on the same chart: ownership only passes through entities that are themselves 50%-or-more blocked-owned.
You may rely on the customer's information, but not when the chart itself gives you facts that call it into question.

What an ownership chart for a complex structure needs to show

An ownership chart for a complex structure maps every legal entity and individual between your customer and its ultimate owners. Each line carries a percentage, a source document, and a date. From that you can calculate each individual's effective stake (direct plus indirect, summed across every path) and then test it against the 25% CDD threshold and, where relevant, OFAC's 50% rule.

Most KYB files get this wrong in the same way. The analyst draws a nice diagram in a slide tool, writes the beneficial owners in a box, and the arithmetic that got them there is lost. When the examiner or the QA reviewer asks why a 20% holder in a second-tier holding company was not identified, nobody can reproduce the answer.

The regulatory hook is the CDD Rule's ownership prong, which reaches indirect holdings:

"Each individual, if any, who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25 percent or more of the equity interests of a legal entity customer"
— 31 CFR 1010.230(d)(1), via Cornell LII

"Directly or indirectly" is why the multi-layer ownership chart exists. If you only record the first layer, you have the customer's shareholders. Its beneficial owners may sit one or more layers further up.

How to build it: five steps

Collect the structure, not the answer. Ask the customer for the full chain up to natural persons, excluded entities (for example, companies listed on a U.S. exchange), or trusts. Get the percentages at every layer, not only the final list of owners. Registry extracts, operating agreements, and shareholder registers are the supporting documents.
Store it as an edge list. One row per ownership link: owner, owned entity, percentage, share class if relevant, source document, and as-of date. A diagram can be generated from this. You can't do arithmetic on a diagram.
Multiply down each path. An individual's indirect stake through a path is the product of the percentages along that path. 60% of a company that owns 50% of the customer is 30%.
Sum across paths for the same person. Add every path that ends at the same individual. This is the step most often skipped, and it is the one FinCEN illustrates.
Test, then record the calculation. Flag anyone at 25% or more as a beneficial owner under the ownership prong. Identify the one control-prong individual separately. Save the calculation in the file, not only the result.

FinCEN's FAQ B.13 works through exactly this case. Company A (owned 60% by Allan and 40% by Betty) and Company B (owned in equal thirds by Betty, Carl, and Diane) each own 50% of the customer:

Allan — Path via Company A: 60% × 50% = 30%. Path via Company B: —. Effective stake: 30%. Beneficial owner?: Yes.
Betty — Path via Company A: 40% × 50% = 20%. Path via Company B: 33⅓% × 50% = 16⅔%. Effective stake: 36⅔%. Beneficial owner?: Yes.
Carl — Path via Company A: —. Path via Company B: 33⅓% × 50% = 16⅔%. Effective stake: 16⅔%. Beneficial owner?: No.
Diane — Path via Company A: —. Path via Company B: 33⅓% × 50% = 16⅔%. Effective stake: 16⅔%. Beneficial owner?: No.

"For purposes of the Rule, Allan is a beneficial owner of Customer because he owns indirectly 30% of its equity interests through his direct ownership of Company A. Betty is also a beneficial owner of Customer because she owns indirectly 20% of its equity interests through her direct ownership of Company A plus 16⅔% through Company B for a total of indirect ownership interest of 36⅔%."
— FinCEN, CDD Rule Consolidated FAQs, B.13

The pruning trap in multi-layer structures

Practitioner insight: the error we see most in complex ownership charts is not bad multiplication. It is pruning. Analysts working a five-layer structure reasonably want to stop chasing branches that can't matter. So they drop any path whose effective share of the customer is under 25%. In the FinCEN example, that shortcut gets lucky with Betty: her Company A path alone is only 20%, so pruning would have missed her too. Change her Company A stake to 30% and the problem is obvious. Her two paths are 15% and 16⅔%, each under 25% on its own, and her combined stake is 31⅔%. A path-by-path pruning rule drops a beneficial owner.

The safe stopping rule is narrower than "under 25%, ignore." You can stop expanding a branch when it ends at a natural person, an excluded entity, or a trust (where the CDD Rule points you to the trustee). You can also stop when the whole branch's share of the customer is so small that no one in it could reach 25% even after adding their stakes in every other branch. That last check needs the full list of names first, which is another reason to build the edge list before drawing anything.

Two more things to settle before calculating. Use equity interests, not voting rights, for the ownership prong; record voting or veto arrangements separately for the control view. And if share classes carry different economics, note which class each percentage refers to.

Same chart, different math: the OFAC view

If any node on the chart is a blocked person, you need a second calculation. OFAC's 50 percent rule does not multiply through every layer:

"'Indirectly,' as used in OFAC's 50 Percent Rule, refers to one or more blocked persons' ownership of shares of an entity through another entity or entities that are 50 percent or more owned in the aggregate by the blocked person(s)."
— OFAC, FAQ 401

So under CDD, a 30% stake in a holding company that owns 100% of the customer counts as 30%. Under OFAC, a blocked person's 30% stake in that holding company does not pass through at all, because the holding company is not 50%-or-more blocked-owned. Running both calculations from one edge list avoids two analysts keeping two inconsistent charts of the same customer.

When to stop relying on the customer

The CDD Rule lets you take the customer's word for it, within limits:

"A covered financial [institution] need not independently investigate the legal entity customer's ownership structure and may accept and reasonably rely on the information regarding the status of beneficial owners presented to the financial institution by the legal entity customer's representative, provided that the institution has no knowledge of facts that would reasonably call into question the reliability of the information."
— FinCEN, CDD Rule Consolidated FAQs, B.13

A well-built chart is often what produces those facts. Watch for holdings that cluster just under 25% (24%, 24%, 24%, 28%), intermediate entities in secrecy jurisdictions with no stated purpose, or nominee directors at multiple layers. The FFIEC manual notes that staff who suspect equity holders are trying to avoid the reporting threshold may, depending on the circumstances, need to file a SAR. These are also the files that belong in enhanced due diligence.

For the control side of the same file, see our post on the control prong vs. the ownership prong. For how certification works now that U.S. companies no longer report BOI to FinCEN, see beneficial ownership certification after the BOI rollback.

FAQ

How do you calculate indirect ownership through multiple layers?

Multiply the percentages along each path from the individual to the customer, then add together every path that ends at the same individual. FinCEN's FAQ B.13 shows a person reaching 36⅔% through two paths.

Do I need to verify every layer of a complex ownership structure?

Not automatically. The CDD Rule lets you rely on the customer's representations unless you know facts that call them into question. Higher-risk structures warrant supporting documents under your risk-based procedures.

Is the CDD 25% calculation the same as OFAC's 50 percent rule?

No. CDD multiplies through every layer. OFAC only counts indirect ownership through entities that are themselves 50% or more owned by blocked persons, and it adds stakes from all blocked persons together.

Build the chart once, use it twice

Justin, Axle's diligence agent, works KYB reviews by gathering the ownership documents, laying out the structure layer by layer, and showing the analyst how each beneficial owner conclusion was reached. Your team signs off on the decision. See how Justin handles complex ownership. For the broader onboarding workflow, see KYB business onboarding.

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