UBO (Ultimate Beneficial Owner)

The ultimate beneficial owner is the physical person(s) who ultimately owns or controls the customer company, or on whose behalf a transaction is being conducted. In the context of anti-money laundering legislation, financial institutions are required to identify the UBO to understand the ownership structure of the company and the sources of its funding. Typically, a UBO is someone who owns or controls more than 25% of the company’s shares or voting rights.

A company can have multiple Ultimate Beneficial Owners (UBOs) in the following scenarios:

1. Multiple Owners: 

When a company has several owners, each holding a significant portion that exceeds the established threshold for defining a UBO (usually this is 25% of shares or voting rights).

2. Complex Ownership Structures: 

If a company has a complex ownership structure with multiple levels of subsidiaries and affiliates, there could be UBOs at each level.

3. Trusts and Foundations: 

In cases where a company is owned by a trust or foundation, all persons controlling the trust (settlors, trustees, protectors, etc.) may be listed as UBOs, or all beneficiaries of the trust if their share of influence meets the UBO criteria.

4. Shareholder Agreements:

Sometimes several individuals may enter into an agreement for joint control over a company, which also makes all of them UBOs.

5. Equal Distribution:

In family businesses or partnerships where the founders have distributed ownership equally among themselves, each founder may be considered a UBO.

Identifying all UBOs is a critical component of Know Your Customer (KYC) processes and Anti-Money Laundering (AML) efforts, as financial institutions and regulatory bodies require transparency regarding the ownership and control structure of companies.