Domiciliary Company

In financial and regulatory contexts, a domiciliary company refers to an entity that is incorporated in one jurisdiction but conducts its management, operations, or business activities in another. Such structures are commonly used for international business, holding structures, or tax planning, but they can also introduce additional compliance, transparency, and money laundering risks. Banks therefore assess domiciliary companies carefully during onboarding and ongoing due diligence.

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Synonyms

Non-operational entity, holding company

Acronyms

Examples

A Swiss bank onboards a company incorporated abroad. It assesses if there is an effective operational activity performed by that company. As part of its due diligence obligations, the bank requires the completion of Form A, which documents the beneficial owners/ The bank reviews the company’s ownership structure, place of effective management, and business activities to assess transparency and potential money laundering risks before deciding on the appropriate level of due diligence.

FAQ

Are domiciliary companies illegal?

No. While domiciliary companies are often subject to Enhanced Due Diligence due to a heightened risk of money laundering or tax evasion, they can operate fully within the law.

Why are domiciliary companies used?

Domiciliary companies are commonly used to manage assets, benefit from tax regimes, and simplify cross-border transactions.

How do banks process domiciliary companies?

When conducting business with domiciliary companies, banks perform Enhanced Due Diligence to more accurately assess any potential risks of financial crime.