The UBO and the UBO register: What were the rules again?

Reading Time 6 minutes | Written by Sharomy Autar | October 15, 2020

Back to basics: What is a UBO? Let’s start at the beginning. A UBO is an ‘ultimate beneficial owner’. An ultimate beneficial owner is, in principle, a person who ultimately owns or controls more than 25% of the shares or voting rights of a company, or otherwise exercises control over the company or its management.

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UBO-identification

Not everyone wants to be identified as a UBO. Criminals, for example, deliberately make use of the opacity of company forms to hide their identity and the real purpose of the organization. The reason for this may simply be old-fashioned tax evasion, but it may also be to prevent the authorities from detecting crime, such as money laundering or bribery and corruption. Or even worse, it could be a cover for terrorist activities.

Whatever the reason, as an organization you want to comply with legislation, but above all you want to protect your reputation and limit risks. If your business is associated with crime, corruption or money laundering, your reputation is at risk, customers might avoid you and business partners may no longer want to cooperate.

Understanding structures with help of data

Identifying a UBO and exposing criminal activities at business partners is therefore not only a legal obligation, but also necessary to protect your organization. However, unpicking an entire UBO structure is not an easy job. In our paper "Download: Understanding complex UBO structures (NL)"we help you better understand the complexities of legal beneficial ownership structures. The paper also provides insight into how data and analytics can improve the speed and accuracy of UBO identification and how you as an organization can benefit from improved knowledge management, in order to free up resources for other purposes.

What about the UBO register?

The UBO register is covered by the Trade Register Act and is administered by the Chamber of Commerce. The purpose of the UBO register is to combat cases of financial and economic crime. One example is money laundering. Since 27 September 2020, organizations have to register their UBOs. If you do not register your UBOs on time, fines or penalties will be imposed.

In the Netherlands, the following legal entities are obliged to register their UBOs:

  • unlisted private and public limited companies
  • foundations
  • associations with full legal capacity
  • associations with limited legal capacity but with enterprise
  • mutual insurance societies
  • cooperatives
  • partnerships (partnerships, general partnerships and limited partnerships)
  • shipping companies
  • European public limited liability companies (SE)
  • European Cooperative Societies (SCE)
  • European economic interest groupings which according to their articles of association have their registered office in the Netherlands (EESV)
  • churches

The UBO register is accessible to everyone. Only part of the information on UBOs is public. This is:

  • the first name and surname;
  • the month and year of birth;
  • the nationality;
  • what country or state the person lives in;
  • and the nature and extent of the economic importance of the UBO.

Certain competent authorities, such as the Public Prosecutor’s Office, can access more information. The UBO register is now operational in the Netherlands, and can be accessed for a fee.

UBOs abroad are a different matter

This is the state of affairs for the Netherlands. But a UBO does not stop at the national border. When you do business with an organization abroad, you will have to request the UBO data from an international register. So what about other countries?

The implementation of the guidelines is taking place at a different speed in each country and, in addition, a country can take its own decisions regarding the establishment of its local UBO register. They can therefore determine whether a register is public or private, for example, and what information is processed in it.

If you do international business, you face the following challenges:

  • UBO registers are not yet fully operational in every country
  • The registers contain different information in each country
  • Each country decides who can access the register, and who can’t
  • UBO registers in different countries are not linked to each other yet

As you can see, each country’s UBO register has its own interpretation and status. If you do business with an organization abroad, it is very likely that different rules apply there for UBOs, and the question is whether the information in the corresponding register is easy to access. Are you looking for an approach to ascertain international UBOs? Read our paper “Cross-border approach to ascertaining an international UBO (NL)”.

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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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