UBOUltimate Beneficial Owner
The natural person or persons who ultimately own or control a legal entity or arrangement, directly or indirectly, or on whose behalf a transaction is conducted. UBO transparency prevents the misuse of shell companies, trusts and nominee arrangements. FATF Recommendations 24 and 25 require countries to ensure that adequate, accurate and up-to-date beneficial ownership information is available to competent authorities.
Why it matters
Financial institutions must identify and verify the beneficial owners of legal entity customers as part of customer due diligence. The US Customer Due Diligence Rule uses a 25 percent ownership threshold plus one individual with significant control, and the EU AMLR, which applies from 10 July 2027, also uses 25 percent while allowing a lower threshold for higher-risk categories of entities.
Beneficial ownership registers have changed sharply. In November 2022 the Court of Justice of the EU struck down general public access to EU registers, and under the sixth AML Directive access is reserved for authorities, obliged entities and people with a legitimate interest. In the US, FinCEN's March 2025 interim final rule exempted US companies and US persons from reporting under the Corporate Transparency Act, leaving only certain foreign companies registered to do business in the US, and a final rule effective in August 2026 made those exemptions permanent.
Because registers can be incomplete or out of date, institutions still need to verify ownership themselves and map complex structures.
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