Knowledgebase

What is Ultimate Beneficial Ownership?

View of the sky with skyscrapers

What is Ultimate Beneficial Ownership?

Most definitions of the term “ultimate beneficial owner” are based on guidelines from the FATF:

Ultimate Beneficial Owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. Reference to “ultimately owns or controls” and “ultimate effective control” refer to situations in which ownership/control is exercised through a chain of ownership or by means of control other than direct control. This definition should also apply to beneficial owner or a beneficiary under a life or other investment-linked insurance policy.

The EU’s Fourth Anti-Money Laundering Directive (MLD4) also substantially addresses ultimate beneficial ownership. Under MLD4, ownership or control of more than 25% of the shares or voting rights in a legal entity assumes ultimate beneficial ownership. MLD4 also allows for senior managing officials to be treated as beneficial owners in cases where the above criteria cannot be determined. Additionally, MLD4 stipulates that EU countries require entities in their jurisdiction to keep up-to-date ownership information in a central registry that is accessible to authorities, obliged entities, and public persons with a legitimate interest, such as journalists or NGOs.

The following data points can be used in determining beneficial ownership:
  • Shareholdings and subsidiaries
  • Direct and indirect ownership
  • Ultimate owner
  • Actual and perceived independent of the company
  • Corporate group, all companies with the same ultimate owner as the subject company
  • Company tree diagrams
  • Beneficial ownership vs. perceived ownership
  • Assessing ownership via top down or bottom up approaches
  • Varying definitions of ownership

5AMLD builds on those steps, introducing the following measures:

  • UBO lists (drawn up under 4AMLD) are to be made publicly accessible within 18 months of 5AMLD’s implementation date.
  • Trusts (or any similar arrangement) must observe beneficial ownership regulations and, like companies, must make that information available to authorities or others demonstrating legitimate interest.
  • UBO national registers must be inter-connected at an EU level in order to facilitate cooperation and the exchange of information between member-state authorities.
  • Member states are to strengthen their UBO verification mechanisms to ensure the information they carry is accurate and reliable.
  • Member states must introduce separate UBO registers for bank accounts: unlike company UBO registers, these lists will not be publicly available and only accessible by authorities.

AML Solutions

Automate onboarding and monitoring processes, whilst minimizing false positives, by utilizing a live global AML database of Sanctions and Watchlists, PEPs and Adverse Media.

0

Comments

Share your thoughts and start a conversation.

Leave a Reply

Related articles:

AML Compliance Officer
May 14, 2018

AML Compliance Officer

What Is An AML Compliance Officer? What is an AML Compliance Officer? In order to…
Read More
AML Compliance Program
May 14, 2018

AML Compliance Program

What Is AML Compliance Program? In order to combat financial crime, banks, credit unions, and a…
Read More
Bank Secrecy Act Officer
May 14, 2018

Bank Secrecy Act Officer

What is a Bank Secrecy Act Officer? What Is A Bank Secrecy Act Officer? A…
Read More
Share:

To make sure you get a great experience on our website, we use cookies. To confirm you consent to this, please click below.
Read more about our Cookie Policy

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close