UBO monitoring: how to make your compliance process more efficient

Reading Time 4 minutes | Written by Sharomy Autar | November 3, 2020

Identifying UBOs is a fundamental legal obligation. However, uncovering and monitoring UBOs can pose tremendous challenges, made more difficult if information is lacking or inconsistent. With the regulatory authorities now recommending that companies monitor UBO information for changes, this will require further effort from compliance teams. So what is the most efficient way of organizing this process? Read on to discover our tips.

Knowing the UBOs of your business partners

An Ultimate Beneficial Owner is defined as ‘a natural person who is the ultimate beneficiary of or who ultimately owns or controls a legal entity’. Identifying your business partners’ Ultimate Beneficial Owners (or ‘UBOs’) is one of the most important aspects of the KYC process. But why is it so important?

First, it is necessary in order to be compliant with the government-imposed laws, such as the AML Directive and Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft). To comply with this legislation and not incur any fines, identifying UBOs has become a key aspect of the Know Your Customer process.

Second, not knowing who your business partners’ UBOs are could expose you to risks. You might unwittingly be doing business with a company that has links to arms trafficking, for example, or terrorist financing, slavery (even child slavery) or money laundering – and you can imagine the harm to your reputation! To avoid this risk, it is vital to identify the UBO – and to continually monitor any changes.

Why you should actively track UBO changes

Not only do you need to know who your business partners of today are, you also need to know who they are tomorrow. Over time, ownership structures grow in complexity, as well as changing in other ways. If a new UBO appears on the scene, this could impact your organization’s risks.

Reasons to continually monitor UBOs:

  • Under the fifth Anti-Money Laundering Directive (5AML), companies are required to monitor and continually update UBO information;
  • Ownership structures are complex, and are often subject to change at multiple levels;
  • Shifts in ownership ratios can move your business partners above or below the risk threshold defined in your organization’s policy;
  • Corporate groups sometimes relocate separate entities to more high-risk countries;
  • You will have the latest information about the UBOs of your business partners.

As you see, keeping track of changes in UBO information is a key requirement for your continued compliance and for protecting your organization.

Ultimate goal: continual automated UBO monitoring

Obtaining information about UBOs is a complicated process, involving numerous lines of inquiry, missing links and contradictory information. Now that it has become a regulatory requirement to monitor information about UBOs, even greater demands will be made on compliance teams everywhere. The solution for monitoring UBOs with optimum efficiency is continual automated UBO monitoring. This involves loading UBO data into your system in real-time; the system then updates itself and warns you if anything changes.

Continual automated monitoring offers numerous advantages:

1. Customize your due diligence processes

By automatically monitoring your organization’s UBOs, you can design your due diligence processes according to predefined rules. You can specify a greater or lesser frequency of checks, depending on whether your partners meet specific conditions. You decide for yourself how far to take your compliance.

2. Use automation to cut costs

Instead of conducting full reviews every time, your compliance team now only needs to review the specific changes – whether in the general information or in the UBO information.

3. Work more efficiently

Now, you only need to check customers if and when a change is identified, instead of reviewing all your partners again.

More information

If you would like to find out more about the ins and outs of UBO monitoring, download our paper on “UBO monitoring: challenges and practicalities” now. Altares Dun & Bradstreet offers data and solutions to help you monitor your entire network in real time. To find out more about our compliance solutions, visit us at altares.nl/en/compliance.

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Sharomy Autar

Marketing Content Officer

White paper

UBO monitoring

The Challenges and Practicalities

Understanding UBOs is a fundamental regulatory requirement in the EU Money Laundering Directive, which forms part of a risk-based approach to Anti-Money Laundering (AML), Know Your Client (KYC) and Client Due Diligence (CDD) efforts. In this whitepaper, we explore ways to overcome the challenges of UBO verification and monitoring.

Pdf of 28 pages, 0.3 MB
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