UBO (Ultimate Beneficial Owner) checks are typically required by organizations and institutions that need to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations. These checks are necessary to identify the true owners and beneficiaries of legal entities, such as companies, trusts, and partnerships, to prevent illicit financial activities, such as money laundering and fraud.
Here are some types of organizations that often require UBO checks:
Private Organisations: The principal concerns regarding beneficial ownership are with privately owned organisations. Regulation recognises that ownership and control of private entities may be exercised through a chain of ownership or by means other than direct control. Company formation agents including law firms and accountants are especially vulnerable to financial criminals misusing corporate entities. Collecting and analyzing beneficial ownership information is one way of preventing bad actors from creating opaque company structures to hide illegitimate or harmful activities.
Trusts: Trusts were recently brought into regulatory scope for beneficial owner checks, but their structure requires a different approach to businesses due to the separate responsibilities of trustees and beneficiaries. In the UK, the Trust Registration Service requires that most trusts are registered with His Majesty’s Revenue & Customs. However, the regulatory obligation to take reasonable steps to verify the identity of the beneficial owners of trusts remains.