Ultimate Beneficial Ownership UAE | UBO Dubai

The Ultimate Beneficial Owner (UBO) in the United Arab Emirates (UAE) refers to an individual who ultimately owns or controls a company, trust, or legal entity, and reaps benefits from its assets and profits. These UBO procedures are pivotal in combating money laundering and terrorist financing within the UAE. Ultimate Beneficial Owner in UAE.

To ensure transparency and compliance, the UAE government mandates all businesses to declare their UBOs. Typically, a UBO is someone who holds a minimum of 25% capital of the legal entity or has a minimum of 25% voting rights.

In line with this, Cabinet Decision No. (58) of 2020 requires entities licensed in the UAE (unless exemptions apply) to prepare and file a UBO register. This decision has been instrumental in regulating beneficial owner procedures and aligning the UAE’s economic position with international requirements.

The process of identifying a UBO involves obtaining the firm’s credentials, identifying ownership structure and percentages, and identifying the beneficial owners.

With these measures, the UAE continues to fortify its commitment to global standards of financial transparency and integrity.

Understanding the Ultimate Beneficial Owner:

In today’s increasingly interconnected world, a critical aspect of maintaining transparency and combating financial crimes like money laundering and terrorist financing is identifying the ultimate beneficial owner (UBO) of a business entity.

But what exactly does this term mean, and why is it essential? This article will delve into these questions to provide a comprehensive understanding of UBOs.

Defining the Ultimate Beneficial Owner:

An Ultimate Beneficial Owner refers to an individual who ultimately owns or controls a company, trust, or legal entity. The UBO is the person who enjoys the benefits of ownership, such as profits or assets, even though the legal title of the property may be in another name.

Typically, a UBO is someone who holds a minimum of 25% of a company’s shares or voting rights. However, if no individual meets this criterion, the UBO could be a person who exercises control over the management or direction of the company through other means.

The Importance of Identifying UBOs:

Identifying the UBO of a business entity is crucial for several reasons. Firstly, it helps to ensure transparency in business operations by revealing who truly benefits from a company’s activities.

This can prevent individuals from hiding behind corporate structures to engage in illicit activities, such as fraud, tax evasion, corruption, or money laundering. DMCC Approved Auditors Dubai | UAE – WAPC.

Secondly, identifying UBOs is a key element of Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations worldwide. Financial institutions are required to ascertain the UBO of their clients as part of their due diligence procedures to mitigate the risk of being used as a conduit for financial crime.

UBO Regulations Around the World:

Many jurisdictions have introduced regulations requiring companies to maintain a register of their UBOs and report this information to a central registry.

For instance, in the United Arab Emirates (UAE), Cabinet Decision No. (58) of 2020 mandates all businesses to declare their UBOs. This decision has been instrumental in aligning the UAE’s economic position with international requirements and enhancing financial transparency.

Similarly, in the European Union, the Fourth Anti-Money Laundering Directive requires all EU member states to maintain a central register of UBO information for companies and trusts.

Understanding the concept of the Ultimate Beneficial Owner is crucial in today’s business landscape. It not only promotes business transparency but also plays a pivotal role in combating financial crimes.

As regulatory frameworks continue to evolve globally, companies must ensure they maintain accurate UBO information as part of their compliance procedures.

UBO Identification:

UBO identification refers to the process of identifying the Ultimate Beneficial Owner of a company or legal entity. This is a critical aspect of due diligence procedures in financial and non-financial sectors, designed to combat money laundering, terrorist financing, corruption, and other financial crimes.

Typically, an Ultimate Beneficial Owner (UBO) is identified as an individual who owns or controls more than 25% of a company’s shares or voting rights, or who otherwise exercises control over the company.

If no such person exists, the senior managing official(s) – such as the CEO or directors – may be considered the UBO.

The process of UBO identification involves several steps. It starts with obtaining information about the ownership and control structure of the company, then verifying this information through reliable and independent sources.

The collected information often includes the UBO’s name, date of birth, nationality, and details about their ownership or control over the company.

Understanding the UBO of a company helps prevent misuse of the financial system, promotes transparency, and aids in complying with global Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations.

Ultimate Beneficial Owner Vs Beneficial Owner:

The terms “Beneficial Owner” and “Ultimate Beneficial Owner (UBO)” are often used in the context of financial regulations, particularly those related to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF). While they may seem similar, there are subtle differences between the two.

A Beneficial Owner is a person who enjoys the benefits of ownership even though the title to some form of property is in another’s name. Essentially, this individual has significant control over or stands to gain from transactions involving an asset.

On the other hand, an Ultimate Beneficial Owner (UBO) refers to the natural person(s) who ultimately owns or controls a legal entity and benefits from its profits.

In other words, the UBO is the person at the top of the ownership chain who exercises ultimate control over the entity, regardless of how many other parties or entities might be involved.

In most cases, the beneficial owner and UBO can be the same person. However, in complex corporate structures or trusts, the UBO might be different from the immediate beneficial owner.

This distinction is crucial for due diligence procedures and regulatory compliance, as identifying the UBO helps prevent financial crimes like money laundering and corruption.

Understanding these terms and the difference between them is critical for companies and financial institutions that need to comply with global AML and CTF regulations, which require them to identify and verify the UBOs of their clients or business partners.

How to Verify Ultimate Beneficial Owner:

Verifying the Ultimate Beneficial Owner (UBO) in the United Arab Emirates (UAE) is a crucial step in ensuring compliance with local and international regulations, particularly those related to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF).

The key steps involved in verifying the UBO in the UAE:

Obtain Identity Documents: Gather any identity documents of the UBO, such as Emirates ID, valid passport, driving license, or any other ID issued by a competent authority. Know more details about Ultimate Beneficial Owner in UAE.

Acquire Legal Entity’s Credentials: Check whether the company is registered and legitimate. This can involve reviewing registration documents, licenses, and other official records.

Understand Ownership Structure: Acquire data on a legal entity’s ownership chain to identify the individuals who ultimately own or control the company. The company usually discloses the percentage of shares held by a UBO in its business verification check procedure.

Send Inquiry to Suspected Real Beneficiary: In some circumstances, if there’s suspicion about the real beneficiary, an entity must send an inquiry to the suspected real beneficiary. If they do not receive a response within 15 days, further actions may be necessary.

Use of Compliance Services: Some companies offer products that help businesses adhere to regulatory compliance and verify the UBO of any company. Ultimate Beneficial Owner in UAE.

Remember, these steps may vary based on the specific requirements of each situation, and it’s always recommended to seek professional advice when dealing with matters of compliance and verification.

Legal Entity’s Responsibility:

  • At the time of their registration and licensing, companies are expected to provide all required details accurately.
  • Companies should share their trade name and their official address in the Emirates on all of their documents.
  • If there is a doubt about who is the real beneficiary, the company should intimate this to all of its beneficial owners.
  • Once the UBO has been identified and declared, companies must provide relevant details of the UBO in the register. They must also make sure to keep the register updated. Any changes that a company becomes aware of should be amended in the register within 15 days after the change came to notice.
  • Companies should provide all data regarding their UBO (and other requirements of the resolution) no later than 60 days after the enactment of cabinet resolution 58. Or, no less than 60 days after the registration and licensing of a company has been completed.
  • Provide information to the registrar as required. The same information must be shared with authorized personnel.
  • Any changes made in the data shared with the registrar must be intimated to the registrar within 15 days of making the changes.