What is beneficial ownership?
Ultimate Beneficial Ownership (UBO) is an ultimate beneficial owner or the ultimate interested party refers to the natural person who ultimately owns or controls a customer and / or the natural person on whose behalf a transaction is conducted, according to the Financial Action Task Force (FATF). This includes those who exercise ultimate legal control over a person or an arrangement.
While this is a useful definition, there is no set global standard for the application of such guidelines in different regions. In addition, the UBO can often be a moving target. Regulations are rarely static and national and supranational legislation is constantly evolving, thus, making it difficult to identify the UBO.
Why is UBO Check important?
In order to prevent them from doing business with criminal parties, financial service providers, all companies operating internationally, are obliged to draw up a UBO declaration establishing the identity of a UBO, depending on the country they are doing business in.
In doing so, these companies comply with national and international laws on money laundering (AML), bribery and corruption and regulations relating to Know Your Customer (KYC) and the WWFT. This is becoming increasingly important for companies in order to avoid high fines and reputational damages.
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UBO in the European Union
In March 2019, the Anti-Money Laundering: Beneficial Ownership of Corporate Entities Regulations 2019 directive came into force within the EU. In addition to the above, the Fifth Anti-Money Laundering Directive ( AMLD ) modifies the 'trusted and independent source' criterion for the verification of customer data by adding: if available, electronic identifiers.
A number of new measures are also being added, including:
- extension of transparency obligations, including UBO, to all tax consultancies and funds
- possible reduction of beneficial ownership from 25% to 10% when an entity poses a significant risk of money laundering or tax evasion
- improved due diligence in handling transactions from high risk countries, and
- finding out the source of the money and their assets
As of September 27, 2020, companies are obliged to register their owners or persons who have control in a UBO register. This register is also a result of European regulations.
Monitor UBO with Nexis Diligence
Do you want more insight into hidden stakeholders that could potentially endanger your organization? With LexisNexis risk management solutions you can identify and manage your risks even better. By conducting thorough research into the market, your customers, your suppliers and your cooperation partners, you will avoid surprises for your organization.
Our Nexis Diligence™ screening tool contains Dun & Bradstreet® UBO data on millions of companies worldwide. But also information from blacklists, PEP and sanction lists and watchlists. For example, you can find all relevant information in one search to make it clear whether there are any risks.