Ultimate Beneficial Owner (UBO) Due Diligence
Also known as UBO, the term Ultimate Beneficial Owner refers to a Natural Person that either owns or controls a specific Legal Entity, directly or through another legal entity.
Verifying the identity of a natural person who owns or controls the company you are doing business with is a crucial requirement of corporate due diligence of a potential partner or investment. Regulations such as the 4th AML Directive (Europe) and the Final Rule for Customer Due Diligence (the U.S.) oblige companies to identify and verify their ultimate beneficial owners, as well as ensure that their information is up-to-date and accurate.
Who is an Ultimate Beneficial Owner: Example
Let’s say Person A owns 50% of a Parent Company X, which owns 50% of Subsidiary Company Y. In a simple scenario, Person A would be considered an Ultimate Beneficial Owner of Subsidiary Company Y with a 25% interest in both ownership and control.
If Person A were to reassign voting rights of their equity shares in Subsidiary Company Y to Person B, Person A would be considered a UBO based on ownership, while Person B would be a UBO based on control.
Identifying UBOs with iComply
To comply with Anti-Money Laundering regulations, it is essential for financial institutions to identify and verify the Ultimate Beneficial Owners of their corporate customers to ensure they are not involved in money laundering or terrorist financing.
UBO due diligence (both CDD and EDD) is a part of a KYC process for a legal entity, which also includes identity verification, risk screening, and enhanced due diligence.
The iComplyKYC platform leverages artificial intelligence and edge computing to effectively identify and verify the Ultimate Beneficial Owners of organizations.