Identifying ultimate beneficial owners (UBOs) remains one of the toughest challenges for compliance teams conducting customer due diligence (CDD).
According to KYC360, these individuals, who ultimately own or control legal entities, must be verified to meet anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. However, complex ownership structures, shifting regulations, and manual workflows often make this process time-consuming and error-prone.
The difficulty lies in uncovering the true owners behind multi-layered corporate structures, which often span multiple jurisdictions. Some entities use nominee shareholders, trusts, or shell companies to conceal control, complicating transparency efforts. When firms rely on outdated data or manual processes, the risk of missing critical ownership links rises — increasing exposure to sanctioned individuals, politically exposed persons (PEPs), or those involved in financial crime. Non-compliance can result in severe penalties and reputational damage.
In recent years, regulators have tightened expectations. The Financial Action Task Force (FATF) has updated its guidance under Recommendations 24 and 25 to ensure that ownership information remains “adequate, accurate and up-to-date.” The EU continues to enforce beneficial ownership registers through successive AML directives, though a 2022 court ruling restricted public access, creating new visibility gaps. In the United States, the Corporate Transparency Act (CTA) came into effect in 2024, requiring companies to submit ownership data to the Financial Crimes Enforcement Network (FinCEN). However, enforcement challenges persist after the Treasury’s 2025 decision to pause penalties for non-compliance.
To stay compliant, firms must verify, document, and continuously monitor who truly controls their customers. The general process involves collecting company data, mapping ownership structures, identifying natural persons with controlling interests, and cross-checking them against sanctions, PEP, and adverse media databases. Risk levels must be assessed and documented, with enhanced due diligence (EDD) applied where necessary.
Manual UBO verification is resource-heavy, but technology now offers a more efficient path. Platforms such as KYC360 enable automated onboarding and continuous monitoring, integrating ownership data from multiple jurisdictions and visualising complex corporate structures.
These systems can instantly screen individuals against sanctions and PEP lists, providing compliance teams with dynamic forms, audit trails, and configurable risk scoring. This automation not only accelerates onboarding but also reduces human error and frees teams to focus on higher-risk cases.
To strengthen UBO identification, firms should adopt a risk-based approach, adjusting investigation depth according to each entity’s risk profile. Relying solely on customer-provided data is risky — firms should verify details against multiple independent sources. Clear internal policies, ongoing staff training, and a strong escalation culture ensure consistency and audit readiness.
Ultimately, UBO transparency depends on a balance of people, process, and technology. As KYC tools evolve, the task of identifying complex ownership structures is shifting from manual compliance burden to streamlined, data-driven efficiency.
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