Beneficial Ownership

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Beneficial Owner: See through the smoke and mirrors

Recent global events have spotlighted the need for organisations to work closer with customers and establish the identity of ultimate beneficial owners (UBOs). Recommendation 10 from the Financial Action Task Force (FATF) which addresses Customer Due Diligence (CDD), states that financial institutions must identify the beneficial owner and take reasonable measures to verify their identity.

The FATF defines a beneficial owner as “the natural person who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement,” – a definition which is widely accepted across the world.

Below is our checklist of some suggested tips for use in customer conversations around ultimate beneficial ownership to help you ask the right questions and collect the most accurate information. Once you have on-boarded a customer and established that they have a UBO, you must verify the identities of all involved and continually screen them against global watchlists.

LexisNexis® Risk Solutions provide powerful software and enhanced due diligence (EDD) platforms that can verify the identity of beneficial owners and support ongoing monitoring of politically exposed persons, sanctioned entities and adverse information.

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Educate customers about the benefit of sharing UBO information

To better serve your customers, educate them on the reasons why it will benefit them to share the details of all their holdings and corporations.

Better long-term customer relationship management

Better long-term customer relationship management

Having this information will help your organisation better understand its customers in order to build a stronger, mutually beneficial relationship for the long-term.
Compliance

Compliance

Your organisation needs this information in order to comply with global regulations.
Obligation of the customer’s organisation

Obligation of the customer’s organisation

Sharing this information helps to fulfil the reporting and compliance requirements of the customer’s organisation.

Acquire key pieces of information from customers

Require customers to provide UBO information – advise the customer that all information provided will be stored securely.

Names of natural persons

Names of natural persons

Require customers to provide the names of the natural persons that are UBO of legal persons or arrangements.
Purpose for layers of corporate names

Purpose for layers of corporate names

Where there are other entities listed as UBO, enquire about the purpose of single and/or multiple layers of corporate names to better understand the reason for that protection.
Changes in ownership

Changes in ownership

Require customers (especially those rated “high-risk”) to provide updated information about changes in substantial ownership (following jurisdictional percentage requirements – i.e. 25%, 10%, etc.) whenever there is a change in ownership and at least annually.
Certificates of ownership

Certificates of ownership

Require customers to provide certificates of ownership as evidence of entitlement and retain said certificates securely.

Action steps after receiving customer information

Corroboration

Corroboration

Corroborate the information provided by the customer with outside sources besides business formation documents and adverse media searches.
Advanced screening

Advanced screening

Consider using advanced tools that incorporate government filings, public records and database solutions used to screen against special watchlists. Verify if names provided by customers appear on PEP lists or other enforcement lists (these tools may also provide affiliated names and adverse media references associated with a UBO).
Outsource intelligence services

Outsource intelligence services

On more difficult cases of UBO identification, consider outsourcing to intelligence services. They may provide enhanced due diligence information that is not publicly available.
Bookmark corporate registries

Bookmark corporate registries

For expedited access, bookmark online pages for corporate registries provided by government agencies in order to corroborate information provided by customers.
Stay up-to-date

Stay up-to-date

Create a plan to periodically review and update the customer profile.
Continual monitoring

Continual monitoring

Continue to monitor for unusual transaction activity, new KYC information (change in occupation), and perform on-going adverse media searches.
Download UBO Checklist

Identify and screen customers and beneficial owners with LexisNexis® Risk Solutions

Verifying the identity of individuals determined as beneficial owners and conducting Enhanced Due Diligence can be time consuming and costly. However, these costs are far outweighed by the potential damage caused by dealing with money launderers, sanctioned individuals and failing to comply with global regulations. Regulatory fines and a tarnished corporate image can impact your brand value, your profits and your share price.

LexisNexis® Risk Solutions help to simplify due diligence processes, enabling you to verify identity and screen individuals against a comprehensive and unique database of PEPs, Sanctions, enforcements and adverse media.

Over 2.5 million risk entities

Real-time monitoring of all major sanction lists

Real-time monitoring of all major sanction lists

A PEP List of over 1.4 million politically exposed persons

A PEP List of over 1.4 million politically exposed persons

Ongoing screening of over 35,000 news sources in 57 languages

Ongoing screening of over 35,000 news sources in 57 languages

Global screening data

Global screening data

With hundreds of researchers and analysts across the world, we are dedicated to expanding and enhancing our data to ensure the coverage you need. New PEPs are added daily and 100,000 records updated every month.
Stay ahead of regulatory changes

Stay ahead of regulatory changes

We help businesses to comply with their legal and regulatory obligations as set out in, amongst others, the 4th EU Money Laundering Directive, the UK Bribery Act, FATF recommendations and the USA Patriot Act.
Seamless integration

Seamless integration

Watchlist screening needs to efficiently align with your workflow. We provide self search, batch and API services that integrate seamlessly with your existing processes and systems.

Book an online demo

Discover the extensive insight our identity and screening solutions can deliver for your organisation. To arrange a demo or to find out more please call +44 (0)29 2067 8555 or complete the form…