Across the board, businesses and banks are expected to be familiar with the people they do business with. Any institution subject to the rules against money laundering and countering terrorism financing must reveal the UBO’s identification in all commercial dealings.
What is UBO legislation?
In recent years, regulators’ key goals have changed to include combating money laundering and the financing of terrorism. Investigators frequently follow suspicious transactions to fictitious addresses, PO boxes, or the private residences of unwary residents. Some dishonest parties can conceal their activity using offshore accounts, according to investigators.
When an institution starts a transaction, the ultimate beneficiary is known as a UBO, or Ultimate Beneficial Owner.
The concept of a UBO differs from jurisdiction to jurisdiction, but generally speaking, a UBO is someone who owns at least 10% to 25% (depending on the country) of the capital or voting rights in the underlying organisation.
How do banks identify UBOs?
1. Get the credentials of the organisation.
Companies shall provide complete and up-to-date information, including name, company’s registration number, official status, address and the names of top management workers, for verification of legitimacy and accuracy. Exact requirement vary relying on the jurisdiction and AML/CTF regulation standards. A standard of know-your-customer data is provided by the SWIFT KYC as Global Swift Registry, resulting in increased efficiency and preventing data duplication.
2. Find ownership chain
Find out who is directly or indirectly owned by each legal or natural person who has a stake in shares or interests.
3. Specify and confirm the Ultimate Beneficial Owner(s)
Verify the ultimate beneficial owners through Identify the total percentage of shares, management control and ownership stake of every individual and determine which (if any) falls under the definition of UBO.
4. Execute an AML and/or KYC check
All UBOs are required to submit regularly while undergoing the necessary AML/KYC checks in an organized, efficient manner.
5. Organizations that need to register UBOs
Whether your organization needs to register UBOs depends on your legal structure. The following companies must register UBOs:
- Unlisted public limited corporations as well as unlisted private organizations
- The basis
- relationships involving complete legal capacity
- Organizations with a limited legal capacity that conduct business
- Mutual insurance firms
- cooperatives
- Partnerships, including general and limited partnerships as well as professional partnerships.
- Shipping businesses
- Limited liability firms in Europe (SE)
- Cooperative societies in Europe (SCE)
- Organizations representing European economic interests whose statutes provide that their registered offices are in the Netherlands (EEIG)
Additionally, necessary to register UBOs are religious denominations. When this becomes feasible—which is yet uncertain—religious denominations will be notified.
6. Organizations without registration duty
If you belong to one of the following organizations, you are exempt from registering your UBOs:
- Sole proprietorships and solopreneurs (eenmanszaken)
- Listed public limited enterprises as well as listed private companies
- 100% of listed companies’ subsidiaries.
Owners’ organizations
- the emergence of legal institutions (in printing).
- organizations with little legal authority and no commercial endeavors.
- Public legal law institutions.
- other private organizations, such as ancient juristic persons like guilds and courtyards (hofjes).
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