Understanding the concept of UBO (ultimate beneficial ownership) is a crucial part of conducting any sort of business. Whether you’re a new business owner looking to register a brand new company, or a large enterprise assessing a joint venture, understanding the principles of UBO will ensure compliance with legal regulations and secure the company’s array of assets.
What Is UBO?
UBO stands for “ultimate beneficial ownership.” In short, this refers to the individuals or entities that ultimately own or control a company, trust or foundation. This information is not typically available in public information, and can only be accessed by completing anti-money laundering checks and research into a company’s ownership structure.
In some cases, the UBO (or UBOs) may only be the company’s directors or shareholders. But in most cases, there will be several layers in between them and the ultimate owner. For example, if the company is owned by a holding company, then the UBO may be the holding company’s shareholders.
The Importance of UBOs
Knowing who a company’s ultimate beneficial owners are is important for a variety of reasons. For one, it helps ensure compliance with legal regulations—such as the EU Anti-Money Laundering Directive, which requires companies to identify the UBOs of any entities they are conducting business with. It also ensures that companies are in compliance with international standards, and helps protect them from running into any legal repercussions down the line.
In addition, being able to identify the UBO of a company can help organisations, as well as potential and existing customers, understand who the ultimate decision-makers are in the organisation, and who to contact in the event of any dispute or disagreement.
Identifying UBOs
Identifying a company’s UBOs isn’t an easy task, and requires a comprehensive understanding of a company’s ownership structure. It’s also something that should only be done by experienced professionals—such as lawyers, financial advisors, investigators, or other specialists.
Fortunately, businesses and organisations have a few options available to them. They can use public sources such as company filings and registers, or they can hire an experienced professional to conduct the necessary checks and research. The most reliable option, however, is to use a specialized online service, such as those provided by due diligence and compliance firms, to fast-track the process of identifying the UBOs of a company.
The Bottom Line
When it comes to any kind of business activity, understanding the concept of UBO—or ultimate beneficial owners—is essential. By taking the time to identify a company’s ultimate owners, a business can ensure compliance with relevant legal regulations, protect its assets, and gain a better understanding of who the ultimate decision-makers are.