A wide range of industries working in the business field includes all kinds of financial transactions and proceedings. Globally the rate of money laundering lies between 1 to 5% of the total GDP as per analysis of the past years. China being the largest state has the most complicated structure in terms of financial management having largest world banks.
The state also faced fraud in 10,000 Credit cards released by the bank, almost 0.83 fraud cards were caught fraud associated, therefore for handling the transactions and money dealing affairs is necessary to ensure the security of proceedings to avoid any kind of mishap or illegal action.
While working with companies that are obligated to the AML laws nationally, and internationally, therefore a company should have the idea of the consumer or the third party the company is working with. The ultimate beneficial owner plays a crucial part in such situations, as a UBO Ultimate beneficial owner is responsible for holding a shared part in the companies.
The abbreviated name UBO refers to the ultimate beneficial owner. The term UBO is used for an entity or an individual with the right to vote and benefit from the shares in an organization. The UBO is not straightaway called the owner of a firm, instead, a UBO is a natural body that has proper authority or control over the customer on whose accounts the transactions are being made. A UBO is a source to maintain transparency and avoid false fraud or any criminal threats in terms of transactions such as money laundering held by the business and to ensure the transactions are done without any illegal activities involved.
The ultimate beneficial owner is an individual who is ultimately beneficial when the transactions are being held in a company. UBO is an individual who holds a sustainable post in an organization that owns 25% of the company shares minimum. Usually, business firms consider the UBOs who own more than 25% of the share in the company. A UBO is easily identified in a business owned by a single entrepreneur but it gets crucial and challenging when the ownership structure is a bit complex. It is important to know the difference between the common workers of the company and the UBO. A UBO will have financial concerns compared to the common employee. As the UBO Ultimate Beneficial Owner plays an important role in business ownership, so it is essential to identify the accurate UBO as well.
The ultimate beneficial owner identification process basically involves identifying and verifying the UBO of the organization as it is a crucial part of the know your business(KYB) method. It is necessary to know the party the company is working with and to ensure the security of the business transactions. While considering the risk alerts of laundering of money frauds and illegal activities the process of UBO identification is significant. The identification of beneficial owner can be done easily in a few steps:
- Collect the proper data from the consumer that will include the consumer's name, registration, and address. The data collection should be authentic
- Further, in the next step, the collected documented information needs to be examined on how much part of the business is owned by the individual.
- Identify the original individual by creating an analysis between the consumers and the UBO check report, the consumers should match the proper UBO report criteria.
- The Last and major step in the identification of beneficial owner is to apply the KYC(know your customer) method to comply with the AML convention.
As UBO identification plays an important part in the business, it is necessary to verify the UBO of the company as well. UBO of a firm can be identified by the verification method implemented which will help the firm to make transparent and secure transactions avoiding high risks and false charges or any kind of accusations. So, if the company is working in the financial areas, the company is required to carry out the proper UBO checks method as a subordinate of the Anti-Money Laundering(AML) rule of conduct.