Ultimate Beneficial Owner Overview

01 September 2017 Amelia Henderson Best practices

An ultimate beneficial owner (UBO) is an individual who is impacted positively from, and reaps the benefits of ownership even though they are not formally named as the owner of the business. UBO is a term for an organisation or individual that owns at least 25% shares of a business or that holds the power to significantly influence financial or transactional decisions of a company.

Beneficial ownership is distinct from legal ownership, although in most cases the named owner will be the same for both. In instances where the legal and beneficial owners are different, questions of legitimacy may arise. While there are a number of reasons for seeking anonymity, some individuals may choose to remain anonymous for tax avoidance or money laundering purposes.

If a business is looking to enter into a business relationship with a new company, it is their responsibility to establish the true beneficial owner of that business before proceedings begin. Failure to do so may result in financial penalties and regulatory reprehension.

Why does understanding beneficial owners matter?

Determining the ultimate beneficial owner is an extremely important part of the detailed risk assessment that businesses must carry out before they enter into any transaction with a new company. Businesses need to take appropriate measures to identify the beneficial owner to comply with anti-money laundering, anti-bribery and corruption legislation. If a business fails to identify the UBO of a new company it plans to work with, it may be exposed to serious risks and become unwillingly involved in corrupt or terror-related transactions.

Not only does carrying out the necessary due diligence to identify any anonymous persons protect the company from sanctions and penalties, but it also increases corporate transparency and ensures that the business knows exactly it is are working with. This is vital for building strong and credible business relationships.

Identifying the beneficial owner helps companies to protect themselves from risks that may be harmful to their customers, finances and business reputation.
What data sources should companies look at?

Collecting accurate and up-to-date information is instrumental in uncovering criminals who may be hiding their true identity. It can however be difficult to obtain the right information on companies with complex corporate structures.

alt

The data sources you need to look at include:

  • Entries into PEP (Politically Exposed Person) lists
  • Entries into Sanction Lists
  • Entries into Inspection Lists
  • Corporate ownership structure
  • Information on type of ownership and the varying definitions of ownership
  • List of companies that are in the same corporate group with the same ultimate owner
  • Shareholdings and subsidiaries
  • Beneficial ownership vs. Perceived ownership
  • News & social to uncover any negative publicity about the company

alt

How DueDil can help

The richest source of company information

DueDil provides companies with the comprehensive information required for identifying the Ultimate Beneficial Owner. This includes information on company parents and subsidiaries, information on the consolidated accounts the business has, and whether the company has a foreign parent.

Within the Ownership Tab, businesses can find out the name of the UBO, their job title, their percentage ownership of sales, nationality, residency, age and address.

DueDil also provides companies with financial and firmographic data including taxation and total assets of the business.

Businesses can use this information to develop a clear understanding who the Ultimate Beneficial Owner is and determine the level of risk involved in working with the organisation.

alt