Ultimate beneficial owners (UBO) are dealt with in several different acts and regulations in UK law. Some of the most important of which are The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), Small Business, Enterprise and Employment Act 2015, and Economic Crime(Transparency and Enforcement) Act 2022.
Knowing who you are truly dealing with is becoming an increasingly important part of operating a business in the UK. For the companies in the regulated sector it is already a legal requirement; but with financial crime soaring, an increase use of sanctions, and heightened risk of reputational damage companies currently unaffected by UK AML law also need to know the UBO of the companies they deal with.
What constitutes a UBO and how they should be dealt with is legislated across numerous different acts and regulations. This can make it difficult for business directors to build robust and compliant AML processes.
To make this easier for you, we have compiled a list of the major pieces of UK law that deal with UBOs.
The MLR 2017 forms the cornerstone of the UK’s anti-money laundering law and is something all directors in the regulated industry must be familiar with.
The regulations set out by these regulations are far ranging and grant businesses the power and makes them obligated to perform necessary due diligence on clients.
As part of this due diligence, it is a requirement to ascertain and record who the ultimate beneficial owners of the entity, company, or asset in question is.
The Small Business, Enterprise and Employment Act 2015 overhauled a large range of issues with UK company law. These included streamlining company registration, improving access to finance, public sector procurement, access to childcare, and reform around ultimate beneficial ownership.
It did this by introducing the 25% UBO and establishing the People with Significant Control Register. All UK companies are required to submit the details of individuals with at least 25% UBO or control of the company to Companies House.
The People with Significant Control Register is public and is free to access at Companies House.
Whilst the Register of People with Significant Control was introduced in the Small Business, Enterprise and Employment Act 2015, this piece of legislation only laid out the framework for the register.
The People with Significant Control Register Regulations 2016 set out more detailed aspects. Subsequent pieces of legislation amended these regulations to include LLPs in their remit and make it compliant with Act 30 of the Fourth Money Laundering Directive.
As mentioned above, this introduced the requirement for LLPs to submit the details of all UBO’s with at least 25% ownership or control to the Register of People with Significant Control.
These regulations pertain to Scottish businesses and introduced the requirement for Scottish LLPs and certain qualifying traditional partnerships to submit the details of all UBO’s with at least 25% ownership or control to the Register of People with Significant Control
The Economic Crime (Transparency and Enforcement) Act 2022 was created to strengthen the UK’s fight against money laundering and economic crime. It introduced the Register of Overseas Entities, strengthened unexplained wealth orders, and made it easier to prosecute those involved in sanctions busting.
The Act requires any overseas entity that owns or wishes to own property in the UK to submit the UBO to the Register of Overseas Entities. This is because it is extremely common for money launderers and tax evaders to own property indirectly through offshore shell companies.
Hailed as a landmark piece of legislation in the UK’s fight against money laundering and economic crime, the Economic Crime and Corporate Transparency Act 2023 introduced major changes in the regulatory environment for UK corporations.
Amongst them was the introduction of the requirement for all members and PSCs of LLPs to undergo an identity verification process.
The future of UBO regulations promises to see global standards improve with more stringent rules from governing bodies. There are ongoing efforts to create a more unified global approach to UBO regulation with initiatives such as the recommendations by the FATF driving countries to adopt their regulations as the benchmark.
This will make it easier to track beneficial ownership across borders and reducing complexity across boarders. The role of regulatory authorities play a pivotal role in enforcing UBO regulations. As UBO and AML, regulations for reporting are set to be more stringent, businesses must keep up to date and remain compliant in order to avoid enforcement actions and prevent reputational damage.
UBO can be amongst the most difficult pieces of information to discover about a client and you are often presented with confusing ownership structures that take hours to decipher.
We have solved this problem for you, along with the risk of a bad actor hiding beneath the 25% ownership threshold, with our revolutionary new fully international UBO data offering.
This lists ownership from 0.1% and presents ownership structures in a simple and easy to understand manner. Allowing you to do safer, faster, and more compliant business.
Read Rich West, CEO of Red Flag Alert, and his five essential tips to help insolvency practitioners leverage data to drive efficient, long-term growth
A seamless onboarding process is essential for improving customer retention and reducing churn. It also drives long-term revenue growth for your business.
For our quickest response simply call us on 0330 460 9877 and speak to an expert now!