Global UBO Regulations: What Compliance Teams Need to Know

In an increasingly globalised world, cross-border ownership is becoming the norm, driven by advances in technology and a highly mobile global workforce. In most cases, international corporate structures are entirely legitimate, with companies expanding, integrating supply chains, and investing in jurisdictions that offer strategic advantages.

Regardless of the industry or activity, customers, investors, and regulators all have a vested interest in understanding exactly who they are dealing with. However, not all structures are as straightforward as they appear. Criminal networks frequently hide behind complex webs of corporate vehicles that span multiple jurisdictions. As financial crime grows in scale and sophistication, countries are tightening their regulatory frameworks, often guided by standards set by inter-governmental bodies.

In this blog, we explore how global UBO regulations are evolving and what compliance teams need to know.

Who is the Financial Action Task Force (FATF)?

The Financial Action Task Force (FATF) acts as the global standards-setter for beneficial ownership transparency, establishing 40 Recommendations that guide countries in combating money laundering, terrorism financing, and related financial crimes. As part of its mandate, the FATF continually reviews and strengthens these standards to improve the availability and quality of UBO information worldwide. Transparency around beneficial ownership remains a core priority for the FATF, which consistently emphasises that clear visibility of who ultimately owns or controls a company is essential for fair taxation, effective risk management, and preventing illicit financial activity.

Key global UBO regulations shaping ownership transparency

With an increasing focus on the need for transparency, governments around the world are introducing legislation requiring the formal reporting of beneficial ownership by registered entities. Whilst it is not possible to outline every piece of legislation, the below provides a good cross-section of the existing and proposed legislation.

The European Union led the way in 2017 with its introduction of the Fourth Anti-Money Laundering Directive (4AMLD), and later the Fifth Directive (5AMLD) in 2018. These directives required member states to develop national beneficial ownership registries to identify persons who ultimately own or control an entity including senior executives, trustees and others.
In 2019, the Companies Commission of Malaysia introduced the requirement to hold accurate, current and verified information on beneficial owners via the ”Guideline for the Reporting Framework for Beneficial Ownership of Legal Persons”.
In the latter half of 2020, several countries in the Middle East Region introduced UBO reporting requirements, including UAE, Bahrain and Oman. The UAE Government required all entities registered in the UAE to create a register of the ultimate beneficiary by 30 June 2021, with a penalty regime for non-compliance to take effect from 1 July 2021.
In the United States, the government recently passed the National Defense Authorization Act in 2021, requiring companies to have written procedures to identify the UBO of legal entity customers and for reports to be filed with the US Treasury’s Financial Crimes Enforcement Network (FinCEN).²
According to Transparency International, India has also made ”significant progress by requiring companies to maintain beneficial ownership information in their membership registry”⁴ in accordance with Principle 1 of the G20 Principles, which requires member countries to adopt effective anti-corruption measures.
On 27 December 2021 in China, a draft document titled “Interim Measures on Information Filing of Ultimate Beneficial Owners of Market Players” was published jointly by the State Administration for Market Regulation of the People’s Republic of China (SAMR) and the People’s bank of China (PBOC). Due to take effect from 1 March 2022⁵, it was temporarily postponed, however its existence suggests that closer UBO scrutiny is on the cards.
Most recently, in 2021, in the United Kingdom, the registrar of companies has mandated that all corporations must indicate a person with significant control (PSC) who is also known as beneficial owners.
In Singapore, the Monetary Authority of Singapore demands that companies, foreign companies and LLPs (unless exempted) will be required to maintain beneficial ownership information in the form of a register of registrable controllers, and to make the information available to public agencies upon request.

With this changing legislation around beneficial owners, it is imperative for compliance officers to tap on proven and effective smart tools to aid their due diligence processes.

The challenge of aligning cross-border UBO rules

Whilst there is general agreement that regulations are required to combat financial crime, the implementation of laws in each country that complement each other for international compliance and trade is fraught with difficulty.

There is an ongoing debate about privacy and whether these registries should be publicly available. There is also disparity between the prescribed ownership percentages, type of information to be reported and timeliness of reporting.

With the increase in legislation comes a heavier onus on compliance professionals to not only adhere to the reporting, but also to keep up to date with changing requirements and different interpretations across jurisdictions.

And compliance professionals simply do not have time to trawl through complicated paper trails to unravel corporate structures and follow the sequence of shareholdings and directorships to determine the UBO.

How technology helps simplify UBO compliance

Technology can speed up the process so that compliance professionals can focus on regulatory requirements and not get bogged down in red tape and bureaucracy.

RegTechs like AsiaVerify are transforming business verification across the Asia-Pacific region (APAC), helping businesses overcome the challenges of conducting business across borders, languages and cultures and enter Asian markets with confidence and ease. Regardless of which legislative framework(s) your target company falls into, using a robust UBO solution can help verify or uncover the ultimate beneficial owner.

AsiaVerify is committed to bringing you the latest in AI-powered technology, cutting through bureaucratic red tape and providing instant access to APAC’s most comprehensive business, customer and ultimate beneficial owner verification data, sourced from the most authoritative government registry information across Asia, all fully translated and in real-time.

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