Ownership structures are becoming more complex and riskier to ignore. Whether entering a joint venture, onboarding a supplier, or conducting an acquisition, understanding who genuinely controls an entity is no longer a back-office compliance task. It is a front-line business necessity.
Despite this, many organisations still depend on outdated or one-size-fits-all frameworks or superficial checks to identify Ultimate Beneficial Ownership (UBO). The consequence? Exposure to financial crime, regulatory penalties, reputational harm, and operational disruption often occurring unexpectedly.
Beyond the 25% Rule: Where Standard UBO Checks Fall Short
The Financial Action Task Force (FATF) recommends a 25% ownership threshold to identify beneficial owners. However, individuals and entities intent on concealing true control have developed increasingly sophisticated methods to circumvent this benchmark. Common techniques include:
- Fragmenting ownership across multiple entities to remain below disclosure thresholds
- Employing nominee shareholders, offshore trusts, or shell companies to obscure actual control
- Exploiting regulatory gaps in jurisdictions with limited corporate transparency
While the 25% rule offers a useful baseline, it only captures direct, traceable equity ownership. It does not account for informal control mechanisms, such as differential voting rights or influence through debt instruments. Businesses need to go further by examining influence, intent, and ownership integration across layered corporate structures.
A Real-World Wake-Up Call: The Van Thinh Phat Scandal in Vietnam
One of Southeast Asia’s most significant financial fraud cases involved Truong My Lan, the chairwoman of Van Thinh Phat Group. By utilising over 70 proxy shareholders, she covertly controlled Saigon Commercial Bank (SCB), Vietnam’s largest by assets, while remaining absent from any official ownership records. Over a course of a decade:
- Over £12 billion worth of fraudulent loans were funnelled through complex ownership structures.
- Shell companies, nominee directors, and offshore holdings were employed to obscure the true control.
- Her actions ignited national outrage and led to heightened examination of beneficial ownership frameworks in Vietnam.
Lan was arrested in 2022 and was later sentenced to death, which was then commuted to life imprisonment in 2025. The case served as a catalyst for regulatory reform, highlighting the urgent need for organisations to reassess how they evaluate ownership and control risks.
Lessons Learned: What Businesses Should Take Away
This case provides valuable insights into how even the strongest compliance frameworks can be bypassed. The following are key lessons for risk-aware organisations:
- Do Not Rely Solely on Ownership Thresholds
Thresholds like the 25% benchmark can be manipulated. Businesses must assess integrated ownership, indirect relationships, and governance frameworks to gain a comprehensive understanding. - Control Without Ownership Is Still Risk
An individual can exert significant influence without holding any legal stake in a company. This includes those with historical or informal connections to directors or shareholders. Monitoring such relationships is crucial. - High-Risk Sectors Require Increased Scrutiny
Industries such as real estate, finance, infrastructure, and extractives are particularly susceptible to the misuse of legal structures. These sectors need improved onboarding procedures and regular evaluations. - Reputational risk is contagious. In a connected global economy, risk does not remain isolated. Even indirect exposure to high-risk or non-compliant entities through suppliers, partners, or investors can result in the loss of banking relationships, increased regulatory scrutiny, and reputational damage. Businesses must understand not only their direct links but also the networks they are exposed to via partners, suppliers, and investors.
- Opaque Jurisdictions Require enhanced due diligence
When local registry access is restricted and corporate transparency is limited, such as jurisdictions like Vietnam, Malaysia, Thailand or China, businesses should not depend solely on the documentation provided by the counterparty. Using third-party tools with access to verify local data and risk indicators can help identify red flags early.
UBO Transparency as a Strategic Advantage
Modern organisations see UBO transparency as more than simply complying with regulations. When integrated into broader third-party risk management strategies, UBO discovery acts as a tool for:
- Strengthening supplier and partner vetting
- Supporting sound investment and M&A decisions
- Enabling ESG governance and ethical sourcing
- Creating confidence with stakeholders and regulators
Real-time registry access, automated monitoring, and adverse media screening enable faster onboarding and enhanced governance at scale.
Putting UBO Insight into Practice: A Five-Step Framework
Understanding UBO risk is one thing, and acting on it is another. Businesses aiming to go beyond reactive checks should consider integrating UBO transparency into their third-party risk management programmes through a structured framework. Here is a practical five-step approach:
- Map and Prioritise Third-Party Relationships
Begin by categorising third-party entities (e.g., vendors, joint ventures, customers, partners) according to their risk profile, such as geographic exposure, deal value, sector sensitivity, and influence on business continuity. This approach will help target UBO verification efforts where the risks are greatest. - Access Verified, Real-Time Data
Do not rely solely on documents provided by counterparties. Use a technology platform that aggregates live business registry data from relevant jurisdictions, especially those with limited corporate transparency. This should include multilingual support and layered ownership visualisation tools. - Investigate Beyond the Surface
Where ownership seems fragmented or falls below disclosure thresholds, examine indirect links, shared directorships, and historical connections. Screen all entities and individuals against sanctions lists, politically exposed persons (PEP) databases, and adverse media. - Establish Ongoing Monitoring
UBO relationships can change quickly. Implement ongoing monitoring to get alerts when there are changes in ownership, control, or legal status. Regular updates help prevent surprises from new risks. - Document, Report and Educate
Ensure UBO findings are documented in an audit-ready format for regulatory reporting. Likewise, invest in internal training to raise awareness among procurement, legal, and finance teams so UBO transparency becomes a shared responsibility.
Implementing this framework enhances both governance and agility, enabling businesses to respond confidently to regulatory pressure, reputational risk, or emerging market opportunities.
The Bottom Line: Know Who You Are Doing Business With
As regulatory expectations increase and ownership structures become more complex, superficial checks are no longer adequate. Businesses that fail to identify hidden ownership risks may face financial losses, legal liabilities, or lasting damage to their reputation.
Those who invest in transparency, however, will not only protect themselves but also unlock operational agility, stakeholder trust, and long-term resilience.
If your organisation aims to enhance transparency into complex ownership structures across Asia-Pacific and beyond, tools offering real-time registry access and automated UBO discovery can make a tangible difference.
To see how this might work in practice, request a demo of AsiaVerify’s platform today.
