acquire the firm's credentials
To verify their legitimacy and the accuracy of their records companies have to supply full and up-to-date information regarding register number, firm's name, address, official status, and top management employees. The exact specifications might vary depending on the jurisdiction and fraud regulation standards. Second step:
research ownership chain
Identify natural or legal persons who have a percentage in shares or interests and determine if the ownership is direct or indirect. Third step:
single out the ultimate beneficiary
See to the total percentage of shares, management control, and ownership stake of every individual and calculate if one of them falls under the definition of UBO — has the most benefit. Fourth step:
perform an AML/KYC check
All of those who were deemed UBOs have to go through the full AML/KYC check. Estimating your risks
You have to understand the risk categories UBOs fall into. Ranging from low to high, they demand different approaches: Low risk
For low-risk UBOs it is enough to ask the client to confirm their identity and to sign a statement with the mentioning of all their details. To establish the identity of a low-risk client, it is sufficient to perform the standard visual check (by comparison of the client's facial features shown on the ID's photograph with the real facial features of the client) and authentication check (by verification of the provided ID's authenticity and validity).Mid to High risk
If the person is a PEP or if there are any signs related to terrorism or money laundering, further investigation is required. All business interaction before the case is settled is unsafe for you/your company, posing a risk of being involved in criminal activities. In such cases, according to the FATF recommendations, enhanced due diligence measures may include the following:
- Performing additional searches to collect identifying information from a wider variety of sources and using this information to assess the individual customer's risk profile. Such factors as political exposure, adverse media reports and being subject to legal enforcement measures may contribute to the risk;
- Analyzing the source of funds or wealth involved in the business relationship to be satisfied that they do not constitute the proceeds of any crime and to register any discrepancies between the income, the source of wealth, and the overall net worth;
- Requesting additional information from the customer about the purpose and intended nature of the business relationship;
- Requiring the clients to provide updated information about any changes in substantial ownership at least annually.
This list is non-exhaustive, since every organization is required to determine the necessary safety measures in each particular situation, based on the latter's specific risks.
It is important so any updates are made known of and transmitted to the registry within a month. To collect and register this information firms require separate departments and huge resources. That is why companies have started to use automated solutions that reduce manual labor, taking upon themselves the whole process, from gathering and compiling to submitting and updating the information on UBOs. Complete beneficial owner due diligence solution is a part of our KYB technology — so, let's continue the conversation together and see how we can help.