What is an Ultimate Beneficial Owner (UBO)?

The concept of ultimate beneficial ownership refers to the actual possession of a legal entity by a natural person who, directly or indirectly, controls that entity. 

An Ultimate Beneficial Owner (UBO) is, therefore, the person who actually owns a company or trust, even through complex structures.

Identifying UBOs is essential in today’s corporate environment, particularly in corporate due diligence to comply with AML policies.

Unlike other providers, Ascot International can support you internationally in identifying, verifying, and reporting UBOs in accordance with local and cross-border regulations.ultimate beneficial ownership​

What Is Ultimate Beneficial Ownership?

The UBO is a legal and operational concept that identifies the natural person who ultimately owns or controls a legal entity, regardless of how many corporate layers there are.

From a regulatory perspective, identifying the beneficial owner is a pillar of international anti-money laundering (AML) regulations and corporate transparency programs.

Regulatory authorities require full disclosure of ownership structures to prevent fraud, tax evasion, and risk transactions.

The goal is to identify who really benefits from economic activities, beyond formal structures or corporate names, as the UBO may often be hidden behind holding companies, trusts, or offshore companies.

Who Qualifies as a UBO?

To be considered an ultimate beneficial owner (UBO), an individual must meet specific criteria established by anti-money laundering and tax regulations.

Generally, it is defined as someone who directly or indirectly owns 25% or more of a firm or exercises control through other means—such as voting rights, decision-making power, or contractual influence.

Control does not necessarily derive from formal ownership: it can be exercised through complex structures or through significant influence even without a majority stake.

It is essential to emphasize that only natural persons can be recognized as UBOs, never legal entities or nominees.

Identifying the actual beneficiaries can become very complex in the presence of fragmented structures or jurisdictions that protect privacy. That is why understanding what are nominee services and solutions such as those provided by Ascot is essential to obtaining accurate information and making wise decisions.

Why UBO Disclosure Is Required

Transparency regarding the ultimate beneficial owners’ identity is increasingly a priority today, as opacity increases the risk of financial crimes. It is one of the most powerful tools for combating money laundering, terrorist financing, and tax evasion.

Therefore, knowing the real identity of the owner allows you to be aware of the source of the money being invested and to prevent illegal behavior such as those listed above.

More and more international organizations, such as the Financial Action Task Force (FATF) and the Organization for Economic Cooperation and Development (OECD), have established increasingly stringent parameters for identifying beneficial owners. They require information tracking, verification, and availability to competent authorities. The EU has also aligned itself with these changing legal standards through its anti-money laundering directive (AMLD).

The identification obligation therefore rests with banks, funds, business services providers, and law firms. They must collect and verify all information through the KYC (Know Your Customer) procedure to guarantee compliance with the aforementioned regulations.

How to Calculate Ultimate Beneficial Ownership

Given the highly complex regulatory framework, the secrecy surrounding certain jurisdictions and instruments such as passive business ownership, identifying the actual UBO is often not so straightforward. So, how to calculate ultimate beneficial ownership?

Usually, the natural person who holds at least 25% of the business shares is identified or, where this is not possible, the cumulative shareholding in any intermediate entities is traced.

To do this, it is necessary to identify the corporate structure of any parent companies, holdings, and trusts. The direct percentage of shareholdings held by an entity must be verified, as well as any indirect shareholdings in companies through other entities—for example, 40% of shares in a holding company that holds 30% of the target company. Finally, all of the entity’s shareholdings must be aggregated and added together in order to identify it as the beneficial owner.

Tools and Methods: Ultimate Beneficial Ownership Chart

An ultimate beneficial ownership chart is a useful visual tool for graphically representing the control and ownership structure of a business. This diagram helps map the relationships between shareholders, intermediary entities, and beneficial owners, making it easier to identify UBOs. Among the various information analyzed in this chart are:

• Shareholders: All company shareholdings are analyzed. This includes both direct and indirect shareholdings.
• Intermediary entities: As seen above, sometimes certain entities hold shares in a target company through other entities. For example, a holding that owns 30% of the target company’s shares. In this case, the business’s shares must be traced back to the holding company’s owner.
• Control indicators: Sometimes beneficial ownership can be held even without majority share ownership. There may be contractual or statutory agreements that give the entity particular powers within the firm.

These charts are essential for due diligence, research, KYC verification, and AML checks. They enable financial institutions and all parties involved to quickly understand the ownership structure of a complex entity, facilitating regulatory compliance during onboarding and ongoing monitoring.

Global Requirements and Local Variations

Beneficial ownership regulations vary significantly between countries, although there are shared standards defined by supranational bodies such as the Financial Action Task Force (FATF) and the European Union. In general, companies must collect and report UBO data to competent authorities. For example:

• European Union: The EU requires public registers of UBOs through anti-money laundering directives (AMLD) with control thresholds generally set at 25%.
• United States: The Corporate Transparency Act requires the identification of beneficial owners when a company is formed, with confidential disclosures to FinCEN.
• United Kingdom: The UK has established the People with Significant Control Register (PSC) to increase transparency.
• Singapore and UAE: These countries have registration requirements with central registers with minimum participation requirements.

In these contexts, nominee service providers can assist in the collection, reporting, and management of UBO data, through specific compliance solutions services.

UBOs in Complex Structures

All beneficial ownership rules apply without distinction to any legal entity involved precisely to address the high level of complexity in complex structures. For example:

• Trusts and foundations: Authorities require the identification of all persons involved, such as the trustee, settlor, beneficiaries, or protector.
• Passive business ownership: Passive owners may also be UBOs if they receive substantial economic benefits or indirectly influence governance.
• Offshore holding companies: Offshore companies can layer ownership across multiple jurisdictions, often operating in market environments with high levels of corporate secrecy. 

For this reason, international authorities require all parties involved to perform enhanced KYC procedures to identify UBOs.

FAQs

What is the difference between a legal owner and a UBO?

The legal owner is the person who is formally listed in the registers, while the UBO is the person who actually enjoys the asset.

Is there a fixed threshold for UBO status?

The most common threshold is 25%, but some jurisdictions reduce it to 10%.

How is UBO data reported?

Through regulatory documents, KYC procedures, and formal statements to financial institutions.

Can a UBO be hidden using nominee structures?

Not legally. Even if you use trustees, the actual owner must always be declared.

What happens if UBO is not disclosed?

You may incur penalties such as fines, risk of account freezes, denial of services, or regulatory investigations.

References

Financial Action Task Force (FATF). (2023). Guidance on Beneficial Ownership of Legal Persons. FATF.

Financial Action Task Force (FATF). (2024). Guidance on Beneficial Ownership and Transparency of Legal Arrangements. FATF.

Inter-American Development Bank (IDB) & Global Forum on Transparency and Exchange of Information for Tax Purposes. (2024). Building Effective Beneficial Ownership Frameworks: A Joint Global Forum and IDB Toolkit (2nd ed.).