Getting to know the UBO

Why the latest directive on UBOs is critical to combat corporate crime

When the 5th Anti-Money Laundering Directive was introduced into law by the UK and EU in January 2020, for many professionals it was a much needed addition to legislation that would significantly help business transparency and combat money laundering. In essence, it was good for business and for public and professional confidence.

All jurisdictions signing up to the 5th Directive will build and maintain UBO registries that will be publicly available at any time. UBO registries will also be set up for bank accounts and trusts, although these latter two will not be publicly available but be accessed by the relevant authority such as financial intelligence units and legal advisors looking into money laundering. Investigative journalists who can show a legitimate interest in the case can also have access, which is vital if another Panama Papers (see below) is to be uncovered. Across the UK and EU national UBO registers will be set to connect through a central European platform by April 2021.

So what is a UBO?

Ultimate Beneficial Ownership is a “natural person” who controls or owns a quarter or more of the shares or voting rights in a certain type of business. The UBO has to be written down in detail and kept on the register. Importantly, the 5th Directive puts a bigger emphasis on the transparency of a UBO. The main aim of this is to combat financial crime, particularly money laundering activities where criminals tend to hide behind complex, labyrinthine corporate structures. It actually builds on the previous 4th Directive, which was set up to ensure businesses obtain and retain accurate information about their owners, mainly for due diligence purposes.

How to comply with UBO standards

UBO standards exist in jurisdictions around the world and to comply with the latest UK and EU directive businesses must compile complete UBO data for auditors and legal advisors. Transparency is the key here. Combating opaque cross-border corporate structures needs a huge amount of intricate, collaborative analyses and most state authorities are often slow to deal with this.

As mentioned above, the Panama Papers is a classic example of how complex much of this investigative work becomes. Indeed, this one investigation alone encompassed 80 jurisdictions, 25 languages and a huge international team of journalists, lawyers and financial investigators. Astonishingly, as a result of this sheer dogged due diligence by all parties, $1.2 billion was recovered. With the best will in the world, state authorities often find themselves under resourced and incapable of uncovering such crimes.

According to Global Witness, after the UK became the first country to introduce a public UBO register in 2016, there was a 500 percent spike in the number of enquiries filed by the public regarding the activities of businesses. Furthermore, between July 2017-March 2018, there were more than 58,000 reports by the public regarding discrepancies in the UK company register.

While some are questioning the efficacy of UBOs to combat truly international crime, most agree that public UBO registers are essential for legal authorities across different jurisdictions. But public UBO registers are only as good as the data that is uploaded. This data needs to be actively monitored and maintained for quality and integrity. It’s an iterative process that will probably continue well into future directives.

According to a recent AML/KYC data survey, 46% of professionals said they thought publishing UBO registers would probably fail to increase confidence in UBO data, while 28% claimed the effects of the latest directive were still unclear. The directive will help to provide access to vital data but not necessarily give much confidence in how accurate the data is. But UBOs are clearly useful tools for fighting corporate crime and are another step in helping to engender trust between businesses and the public, as well as state authorities.

In the following pages, IR Global Members write about UBOs in their jurisdictions. Any Google search will highlight how difficult it is to gather information about UBOs in different countries. Moreover, UBOs are often couched in complex legal and financial terms that are difficult for members of the public and even businesspeople to understand. So what follows is a uniquely simple explanation by our members of UBO registration implementation in different jurisdictions, including an overview of the nuts and bolts of UBO registration, the list type of clients in the registry, the type of companies that need to register and predicted future changes in legislation.

Contributing Advisors

  • Paul Beare
    Company Formations in England

    Paul Beare

    goldPaul is a gold member
    Digital PartnerPaul is a Digital Partner
    MOTY 2023Paul was Member of the Year winner in 2023
    Founder, Paul Beare Ltd
  • Isabella Bertani, BBA, FCPA, FCA, MBA
    Company Formations and Foreign Direct Investment in Canada – East and Company Formations and Foreign Direct Investment in Canada – Quebec

    Isabella Bertani, BBA, FCPA, FCA, MBA

    goldIsabella is a gold member
    Founder and Chief Client Strategist, BERTANI
  • Todd Skinner
    Tax (Accountants) in Arizona

    Todd Skinner

    silverTodd is a silver member
  • Damien Malone
    Accounting Services in Ireland

    Damien Malone

    silverDamien is a silver member
    Founder and Managing Partner, Malone & Co
  • Oscar Conde Medina
    Foreign Direct Investment in Mexico

    Oscar Conde Medina

    silverOscar is a silver member
    Managing Partner, Legem Attorneys at Law, SC
  • Yves Lecot
    Formerly Accounting Services and Tax (Accountants) in Belgium

    Yves Lecot

    bronzeYves is a bronze member
    General Manager, Comptafid Benelux NV
  • Robert Lewandowski
    Corporate Law in Poland

    Robert Lewandowski

    bronzeRobert is a bronze member
  • Calum McKenzie
    Offshore Services in British Virgin Islands

    Calum McKenzie

    bronzeCalum is a bronze member
    Director, Folio Group
  • Hervé de Kervasdoué
    Commercial Litigation , Mergers & Acquisitions and Real Estate in France

    Hervé de Kervasdoué

    bronzeHervé is a bronze member
    Partner, BG2V
  • Thierry Stas
    Company Formations in Luxembourg and Corporate Services in Luxembourg

    Thierry Stas

    bronzeThierry is a bronze member
    Partner, Maprima
  • Kimberly Hatfield, CPA
    Tax (Accountants) in California

    Kimberly Hatfield, CPA

    bronzeKimberly is a bronze member
  • Afxentis Zemenides
    Business Advisory Services and Crypto and Digital Asset Advisory in Cyprus

    Afxentis Zemenides

    bronzeAfxentis is a bronze member
  • Dr.iur. Irena Braxator
    Fiduciary and Custodial Services in Panama

    Dr.iur. Irena Braxator

    bronzeDr.iur. Irena is a bronze member
  • Kenneth C. Johnston
    Commercial Law and Insolvency in Texas

    Kenneth C. Johnston

    bronzeKenneth C. is a bronze member
  • Alex Cho曹志光
    Corporate Services in China

    Alex Cho曹志光

    bronzeAlex is a bronze member
    CEO – Sino Corporate Services Group, Sino Group