Beneficial Owner Verification

A Guide to the Ultimate Beneficial Owner Verification


In a world that’s governed by business metrics, financial transactions happening every millisecond, and constant transfers in business ownership, there needs to be order and transparency to avoid any hindrances like money laundering and inappropriate financing. In a constantly changing regulatory environment, firms need to establish standards in order to conduct business sustainably by knowing who their customers are and identifying who ultimately benefits from certain financial transactions.

What Ultimate Beneficial Owner (UBO) verification  means to your business setup in Dubai is simple—there needs to be compliance with the set of rules and regulations provided by UBO, adopted by the company and constantly updated. From the procedure of identifying prominent UBO figures, to preparing company secretarial records and submitting UBO declarations, a company needs to be affirmative with any subsequent changes.

What is Ultimate Beneficial Owner Verification?

In simple terms, a UBO is a set of regulations created to encourage financial transparency in business ownership and transfer of ownership, laced with the objectives of preventing criminal actions that include terrorist financing, money laundering and financial fraudulence. A UBO is a person that receives the greatest benefit from a financial transaction, this also highlights the traces of ownership with shares from one company to another.

In most instances where financial criminals try to launder money, hiding identities to avoid getting caught might be a possibility. Using UBO verification, companies can investigate money laundering methodologies to make sure that company infrastructure isn’t being misused to engage in fraudulent activities.

In the UAE, it’s now mandatory to prepare a register of beneficial owners of shares in your company and file it with the relevant authorities. This is all in hopes of maintaining control over legal arrangements and preventing any room for error or criminal activity.

UBOs can be identified as people with the power of attorney, guardians of minors, people that own at least 25% of share capital or voting rights, and nominee directors that are hired to conceal the identity of the true owners in the company.

Steps in UBO Compliance

Following steps of UBO compliance needs a certain amount of background knowledge to be informative. Here are some of the steps a company needs to take in order to maintain transparency in the future.

1. Identification

Companies are required to provide proof of identification and authentication relevant to the shareholders, partners, direct and indirect UBOs. Afterwards, the information should be collected in a manner that prioritises relevant, up-to-date, and accurate information only.

2. Prepare company records

Companies are required to maintain records and registers of shareholders, beneficial owners, directors, board members, and local sponsors.

3. Submission of UBO declaration

There should be proper compliance shown to competent authorities in order to avoid severe penalties or consequences.

To Conclude

In this day and age where fraud and cyber attacks are of high occurrence, it’s important to establish a company’s beneficiary’s legal entity. A highlighted theme noted by UAE banks, regulators and financial institutions would be the serious crimes of money laundering and terrorist financing detected by major companies in an industry; and more priority on disclosure will help prevent such atrocities in the long run.

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