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