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This page answers your questions surrounding the UBO law. What exactly is a UBO? Is your company also required to identify the UBO? How do you conduct client due diligence and how can you avoid fines from regulatory authorities?
A UBO is an "ultimate beneficial owner" or beneficial owner. As a rule, natural persons are considered UBOs if they have a direct or indirect interest of more than 25% in an entity through shares or voting rights, or exercise direct control in some other way. If this is not the case, senior management or executives are designated as UBOs. This is then referred to as the Pseudo-UBO.
Nevertheless, it may be unwise to stick to a definition when it comes to beneficial ownership definition. FinCen Final rule financial institutions do not need to verify that individuals on a UBO list are actually the true beneficial owners of the entity in question. Thus, financial institutions may not be compliant with other laws that have been implemented such as the EU Fourth AML Directive. This will require additional controls.
In the Netherlands there is a UBO register, but in many countries the registration of a UBO is not mandatory. So establishing a UBO can be quite a challenge.
Almost 70% of Dutch B.V.'s are linked via shares to another company in the Netherlands or are linked internationally to another company. More than 30% of Dutch B.V.'s and N.V.'s have a link to foreign countries.
You can also request the UBO information by asking the company yourself. You then ask in writing for a list of companies and/or names that have 25% or more shareholding in the company. This requires relatively little research work. Remember that a company cannot be the UBO; a UBO is always a person. You will therefore have to find out the UBO of a company on a list. By requesting this from the companies, you fully trust the company and that the information provided is actually correct. In addition, no monitoring takes place.
Another option is to do your own research. You consult verified (international) sources. This keeps you in charge, but this can be a time-consuming task, especially internationally. You will have to deal with different ways of reporting. In some countries it is not mandatory to register a UBO so you will not be able to find out a UBO everywhere. In addition, in different countries you will also have to deal with different languages and therefore also any language barriers.
With Dutch companies, you have the UBO register of the Chamber of Commerce. This lists verified UBOs of Dutch companies. In the Netherlands, it is mandatory in almost all cases to provide a UBO database to the Chamber of Commerce. However, a UBO is not always mandatory. This depends on the legal form of the company.
An external party can provide good support for this. The advantage of this is that you do not have to spend time on research yourself. However, you remain responsible for the results of the research. It is therefore important that you find a reputable partner for this cooperation.
Solutions for tracing a UBO.
Within the Netherlands, the registration of UBOs is mandatory, but this depends on the legal form of the company. Internationally there are different rules for registering UBOs. This differs per country.
According to the World Bank, information about UBOs is rarely included in public records. Simply because it is not mandatory. Governments and regulators are making efforts to ensure transparency of these UBO disclosures, but information about UBOs are not included in laws and regulations such as the AML and CTF laws.
In the EU there are mutual agreements and it is mandatory to keep a UBO register for companies. In the Netherlands, not all companies are required to register a UBO in the KvK. Below is a list of legal forms and whether or not they are required to register a UBO:
These legal forms are required to register their UBO(s):
The following legal forms are not required to do so.
The UBO register is a Dutch database of all beneficial owners of companies with a Dutch Chamber of Commerce number and a certain legal form (see is a UBO mandatory?). This stems from EU regulations that each European country must keep a UBO register. This register is public and contains information such as first and last name of a UBO, year of birth and nationality.
No, a UBO registry is not mandatory worldwide. So not all countries have a UBO register. Within the EU this obligation does exist and all European countries have a UBO register. You can often request this from the local chamber of commerce. There are a number of hooks and eyes to this. Establishing a UBO can be quite difficult internationally. There is no international list where all UBO's are mentioned.
It depends. Any natural person who owns 25% or more in stock is a UBO. But contrary to what you think, more than four people can be a UBO within a company. UBO structures can get very complicated.
So you can see in this example that it is not immediately clear who the UBOs are. There are both direct and indirect people with significant interests in the organizations. UBOs can also hide behind layers of limited liability companies. These complex structures make it difficult to identify the UBOs to be able to identify.
UBOs can stay the same for years, or change rapidly. You won't quickly realize this unless you are monitoring UBOs of organizations through a tool. You almost never get a notification of changes in a UBO registry. It is important to know when a UBO changes. After all, the new UBO may be on a sanctions list, or may be a PEP (Politically Exposed Person). So there are more risks that can occur with the change of UBOs. A tool that monitors this for you can be the solution .
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