Ultimate Beneficial Owner (UBO)
In financial compliance, the Ultimate Beneficial Owner refers to the natural person who ultimately owns or controls a customer or on whose behalf a transaction is conducted. UBO identification is a core requirement under AML regulations and typically focuses on ownership thresholds, voting rights, or other means of control. Identifying the UBO helps banks understand who truly benefits from a business relationship and assess potential money laundering, terrorist financing, or sanctions risks.
Beneficial Owner
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UBO
Examples
For example, a company applying to open a bank account is owned by a holding company, which in turn is owned by several shareholders. Even though the bank’s direct customer is the operating company, it must identify the individual who ultimately controls the ownership structure — such as a person holding more than the defined ownership threshold or exercising control through voting rights. That individual is recorded as the Ultimate Beneficial Owner for due diligence and ongoing monitoring purposes.
FAQ
How is UBO defined in different jurisdictions?
Definitions vary, but UBO is generally a natural person who ultimately owns or controls 25%+ of a company.
What is the UBO threshold for reporting in most jurisdictions?
The most common threshold is 25% ownership/control, but some jurisdictions go as low as 10% or look at other control factors.
How can banks verify UBO information provided by clients?
Banks can cross-check UBO data against company registries, conduct public records searches, and request documentation like ownership charts.
