The Ultimate Beneficial Owner (UBO) and its role in money laundering
Money laundering is a serious financial crime that affects various sectors of the global economy. To combat this practice, regulations and preventive measures have been implemented, including the identification and verification of ultimate beneficiaries (UBOs).
What is a final beneficial owner?
The Ultimate Beneficial Owner (UBO) is the natural person who owns and/or controls an entity, be it a company, organisation, trust or other similar entity. Unlike other beneficiaries, the UBO is the real person who is ultimately behind the legal structure of an entity.
The UBO may be a person or group of persons who, directly or indirectly, owns or controls a significant percentage of the voting rights, beneficial interests, or exercises influence or control over the entity.
It is important to note that a collective investment undertaking may vary from one jurisdiction to another and may be subject to different definitions and legal requirements. However, in general, a UBO is a person who holds an interest exceeding a certain threshold of ownership or control in an entity.
Why is this important for preventing money laundering?
Identifying and verifying Beneficial Owners is essential in the fight against money laundering. Criminals often conceal the illicit origin of funds through complex corporate structures and sophisticated financial transactions. In many cases, they use legal entities and intermediaries to conceal their illegal activities.
Knowing the identity of UBOs enables authorities, financial institutions and other organisations to detect and prevent money laundering more effectively. Identifying the UBO provides information about the person behind the entity and enables an assessment of their reputation, financial history and possible links with criminal activities.
Even if money laundering is not an entity’s primary objective, it is essential to ensure that it does not inadvertently engage in illegal activities that could have legal, financial and reputational consequences. Consequently, identifying UBOs also helps to reduce compliance risks and strengthen the integrity of the financial and commercial system in general.
How is the identity of a decision-making body verified?
Verifying the identity of a Ultimate Beneficial Owner is not an easy task due to the complexity of corporate structures and the lack of transparency in some cases. However, there are technological solutions for remote identity verification that can facilitate this process.
These solutions use advanced data analysis techniques such as facial recognition, identity document comparison and artificial intelligence algorithms to corroborate UBO’s identity. In addition, public and private databases can be used to obtain additional information to validate the identity and reputation of the UBO.
It is important to note that the verification of the UBO’s identity must also comply with the legal and regulatory requirements of each jurisdiction. It is necessary to ensure that the verification process meets established security and confidentiality standards and complies with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.
In short, the Ultimate Beneficial Owner (UBO) is the person who owns and/or controls an entity and plays a crucial role in preventing money laundering. Identifying and verifying the UBO helps to detect and prevent criminal activity, reduce compliance risks and preserve the integrity of the financial and commercial system. Remote identity verification technology solutions facilitate this process, while complying with established legal and regulatory requirements.