Having an ultimate beneficial owner background check is an important step in ensuring that your business is operating by legal and regulatory obligations. When you conduct this type of check, you can determine if the owners of your business have the necessary legal authority to carry out transactions on your behalf.
AML/CTF risk assessment
Performing a comprehensive Ultimate Beneficial Owner (UBO) business background check is the only way to ensure AML compliance. The complexity of the legal structures of businesses, coupled with the lack of beneficial ownership transparency, makes it difficult to track illicit assets and investigate ML/TF offenses. The ultimate beneficial owner is anyone with 10% to 25% capital ownership or voting rights in a company.
For financial institutions, establishing beneficial ownership transparency is important to prevent ML/TF offenses. Increasing beneficial ownership transparency is also beneficial for reporting entities and investigative authorities.
Financial institutions are exposed to financial and reputational risks due to poor AML compliance. They must monitor their activities for money laundering and terrorist financing. The monitoring of these activities includes surveillance of employees, market trends, and various activities.
Identify the natural person(s)
Identifying the natural person(s) behind the ultimate beneficial owner is a must if your company is in the financial services business. In some jurisdictions, financial institutions such as banks and brokerages must complete a comprehensive, multi-faceted, and robust background check on all clients. The process is a bit cumbersome, but the benefits are well worth it. The resulting information can be used to identify red flags and potential nefarious activities. This is especially true of customers with credit card balances and bank accounts with unauthorized signatures.
Aside from a thorough background check, there is a litany of other ways to detect fraud, ranging from a simple form of data collection to more complex techniques, such as the use of electronic payment systems to authenticate customer funds and account numbers.
Verify the information on the Beneficial Owner and Controlling Person form
Whether you are a financial institution or a trader, you need to be aware of the benefits of collecting beneficial owner information. Knowing who owns your company can help you combat fraud and keep you in compliance with regulations.
Knowing who owns your company can be a challenging task. You may find yourself digging through layers of opaque ownership structures. You may need to use an automated solution to save you time.
A Benefits Owner is anyone who holds shares in your company. The best way to find out who owns your company is to run a business verification check. You can use the bronID Portal to do so.
Is the information accurate and up to date?
Obtaining the information needed to conduct an ultimate beneficial owner business background check can be tricky. The industry standard for AML/KYC compliance is to ensure that individuals involved in the transaction are properly identified and verified. While the names of individuals involved in a transaction are not always the actual beneficial owners, it is still wise to keep a record of the relevant information.