Business plan for banks & financial institutions KYC
The Ultimate Beneficial Ownership (UBO‘s) refers to the natural person(s) who ultimately owns or controls a customer and/orthe person on whose behalf a transaction is being conducted. It also incorporates those persons who exercise ultimate effective control over a legal person or arrangement.
The term “beneficial ownership” is conventionally used in anti-money laundering contexts, to refer to that level of ownership in funds that equates with control over such funds or entitlement to such funds. “Control” or “entitlement” in this practical sense is to be distinguished from mere signature authority or mere legal title.
Beneficial owner is a legal term where specific property rights ("use and title") in equity belong to a person even though legal title of the property belongs to another person. This often relates where the legal title owner has implied trustee duties to the beneficial owner
The term reflects a recognition that a person in whose name an account is opened with a bank is not necessarily the person who ultimately controls such funds or who is ultimately entitled to such funds. This distinction is important because the focus of anti-money laundering guidelines – and this is fundamental to the Guidelines – needs to be on the person who has this ultimate level of control or entitlement. Placing the emphasis on this person is a necessary step in determining what the source of funds is.
What “beneficial ownership” is intended to mean for purposes of the Guidelines should be seen as dependent on the circumstances of the account involved. The Guidelines, therefore, do not seek to define the term “beneficial ownership” in the abstract; rather, the focus in the Guidelines is on identifying persons, in particular circumstances, who should be viewed as having the requisite “beneficial ownership”.
The Guidelines begins with the general statement that beneficial ownership must be established for all accounts, but then qualifies this general principle by elaborating in the particular contexts of natural persons, legal entities, trusts and unincorporated associations.
In the context of private banking relationships – which is what the Guidelines address – it should be noted that in circumstances in which the account holder is not a natural person, the general objective is to identify the natural person(s) who, ultimately, has the requisite beneficial ownership. In other contexts – e.g., business segments in which the clients are operating corporate entities with many shareholders – this objective, of course, would not make sense. (Wolfsberg definition )
Within the meaning of the law, the Ultimate Beneficial Owners of a legal entity are the private individuals who directly or indirectly hold or control a stake of at least 25% in the capital or of at least 25% of the voting rights of the company,or who undertake the de jure or de facto management of the legal entity.