Ultimate Beneficial Owner
The Ultimate Beneficial Owner (UBO) is the natural person who ultimately owns or controls a legal entity, directly or indirectly. Identifying the UBO is a fundamental obligation within the anti-money laundering framework.
Under European and most national laws, the ultimate beneficial owner is generally defined as any natural person who directly or indirectly holds more than 25% of the shares or voting rights of a company, or who exercises effective control over its management. When no natural person can be identified according to these criteria, the legal representative of the entity is considered the beneficial owner.
Companies are required to declare their beneficial owners in beneficial ownership registers maintained by national authorities. Regulated entities must identify and verify the identity of the beneficial owner of each corporate client or legal arrangement. This obligation falls within the Customer Due Diligence (CDD) framework and is subject to enhanced checks for complex ownership structures.
Beneficial ownership verification can prove complex in the case of multi-layered structures or entities spanning multiple jurisdictions. CheckFile.ai facilitates this process by enabling automated verification of beneficial owners' identity documents and supporting corporate documentation (certificates of incorporation, articles of association, shareholder registers).
Regulations
Real-world examples
- 1.A bank identifies the majority shareholder of a client company by tracing the ownership chain through three intermediary holding companies.
- 2.An accountant requests updated articles of association and the beneficial ownership register before accepting an engagement with a newly incorporated company.
- 3.A solicitor verifies the identity of the beneficial owner of a property investment vehicle before completing a real estate acquisition.