Due diligence is an important aspect of running a business. When onboarding new clients, it is important to do screenings, like anti-money laundering (AML) and know-your-customer (KYC) checks. But, as a business in Europe, it is also important to ensure that your Ultimate Business Owners (UBO) is registered.
This comes after new legislation was passed in the European Union to mitigate the risks that the European internal market faces. The new legislation fights against money laundering and terrorist financing.
Therefore it is important to ensure that your European business complies with the legislation that combats this risk. Meaning, your business should perform due diligence checks (AML and KYC) and also ensure that your UBOs are registered with the Chamber of Commerce in your country or city.
What is a UBO?
The UBO (Ultimate Business Owner) is basically the person who owns the business or has the decision making power in it. This information is important to keep up to date to prevent money laundering and fraud crimes.
It can be difficult to identify your UBO, so here is a guideline to ensure that you correctly identify your UBO:
- Persons who own more than 25% of shares of a company or legal entity
- Persons who have more than 25% of the voting rights of a company
- Persons who are the statutory director of a company
- Persons who are effectively in control of the company
Note that if your organisation is part of a holding company, then that means the owner of the holding company is the UBO of your organisation. A UBO is always a living, breathing human being, no matter how many companies and entities are between the person and the business.
Not all businesses need to register UBOs, because some – like sole proprietors – can by law have only one owner. Here is a list of businesses that need to register UBOs:
- Associations with full legal capacity or with limited legal capacity but with business activity
- Cooperatives
- European cooperative societies (SCE)
- European economic interest groupings that have their registered office in the Netherlands according to their statutes (EEIG)
- European limited liability companies (SE)
- Foundations
- Mutual insurance companies
- Partnerships: professional partnerships, general partnerships and limited partnerships
- Religious denominations (it is not yet certain when this will be possible but they will be informed when it is)
- Shipping companies
- Unlisted private companies
- Unlisted public limited companies
However, if you fall under this list of organisations, there is no need to register a UBO:
- 100% subsidiaries of listed companies
- Associations with limited legal capacity and without commercial activities
- Legal entities under public law
- Legal structures in formation (in oprichting)
- Listed private companies and listed public limited companies
- Other private bodies, including historical legal entities such as guilds and courtyards
- Owners’ associations
- Sole proprietorships or sole traders
How to register a UBO?
Before you can register your UBOs, it is important to first identify who your UBOs are. Once you have that down, you can easily collect all of the needed information to register your UBOs.
Registering your UBOs will differ from country to country, so it is important that you navigate to your country’s Chamber of Commerce and find out how your UBO should be registered in your country.
It is important to note that only previously registered UBOs are able to register or remove UBOs.
As a general guideline, you will need the following documents to register your UBO:
- A legal ID, like a passport or identity card. For this document,
- The identity number must be visible
- You must have a copy of the front and the back
- It must be a full-colour copy
- Ensure that the copy is the actual size of the ID
- You will also need a proof of residence address for the UBO
If the UBO is not registered in your country, it is important that you find out how the process of identity verification will proceed in that instance. This is common where people live in one country and own a business in another.
It is important to note that not all of the above information will be publicly displayed. This is the only set of information that will be made publicly available:
- The UBO’s full name
- Month and year of birth
- Nationality
- Country of residence
- Nature and extent of the UBO’s interest
Foreign entities
Foreign entities that simply have branches or outlets in the EU don’t need to register their UBOs. This is because the ownership is not in the EU market, but rather in another country. However, it is up to the owner of the company to ensure that the branches in the EU still comply with other due diligence requirements, such as AML and KYC checks.
The process of registering a UBO can be fairly straightforward if all of the information you gathered is correct. It is your responsibility as a business owner to ensure that you stay compliant with all laws set out by the country you trade in.
