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Managing Ultimate Beneficial Ownership Compliance Around the World

Ultimate Beneficial Ownership (UBO) compliance has been one of the prevailing topics for policymakers and governments over the last decade. While for lawmakers, it is still a field for further discussion, companies in different jurisdictions are required to be compliant with the UBO laws already set out.

Diversity is a key description of UBO regulations worldwide. While driven by the same principle of increasing transparency, the main definitions and applicable rules and procedures vary from jurisdiction to jurisdiction. Furthermore, as with any other legislation, UBO reporting requirements remain “movable” even after being set.

The implications of UBO non-compliance are wide reaching; from significant increases in risks of financial crime to reputational damage, hefty financial penalties, loss of license and even criminal prosecutions. From a company’s perspective, it is therefore extremely important to keep an eye on regulatory developments and comply in time.

In our upcoming special report – part of Mercator’s Entity Portfolio Management report series – we delve into the dynamics and nuances of UBO maintenance around the world, ranking jurisdictions on the cost and time it takes to complete relevant UBO tasks based on real life data covering 103 jurisdictions where requirements apply.

Ahead of the report’s release, we provide some guiding principles and key steps for UBO compliance around the world.

1. Know the exact UBO definitions

Always know the exact UBO definition in each jurisdiction and which entity type these regulations apply to. In some countries, UBO requirements apply only to companies but branches are excluded.

But what if no one fits the UBO definition? This doesn’t mean that the entity can do nothing or is exempt from filing – a ‘pseudo’ UBO (for example a senior managing officer of the entity) should be registered.

2. Collect all reportable information & supporting documents

Firstly, clarify what personal information is necessary for filing. This can include full name, nationality, residency address, marital status and percentage held in the company.

This information needs to be collected and kept securely along with any supporting documents (e.g. passport copies, internal registers, etc.) and should be easy to find in case of authorities’ inspection.

3. Keep an internal UBO register

Not all jurisdictions require to keep an internal register, but there are many that do. Regardless, maintaining an internal UBO register helps to track any changes in UBO information and keeps all details in one secure place.

Where internal UBO register requirements do apply, companies must check whether there are specific format or language requirements. Should the register be kept in pdf or hard copy is needed? Should it be signed or not?

4. File details with local authorities in time

Each jurisdiction has separate filing requirements and deadlines. It is vital to be well prepared in advance and keep to the deadlines for initial registration/regular check/filing of changes to avoid penalties or other negative consequences.

Some countries, for example Switzerland and Mexico, do not require filings (at least for now) but do require UBO information to be kept internally.

5. Review UBO information regularly

There are jurisdictions where internal annual review of UBO information is mandatory by law. In some, annual UBO filing is always required, regardless of whether there were any changes of UBO details or not. Other jurisdictions, on the other hand, require UBO filing only in case of change.

Even if a jurisdiction does not explicitly indicate in the regulations that regular review is needed, entities should still check their UBO information at least once a year.

This is because all regulations mention that UBO information must be current, accurate and up to date. And the best way to ensure the accuracy of UBO details is by regular checks.

Ula Cekutyte
Legal Team Manager, Mercator by Citco, Citco Mercator, UAB

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