Reliable and accurate data is critical for identifying and verifying ultimate beneficial ownership (UBO). How can organizations develop a data-driven approach to UBO compliance in order to meet their legal and regulatory requirements and fight financial crime?
- Entity screening and subsequent UBO validation can be manual and cumbersome due to multiple systems and platforms.
- A data-driven approach to UBO compliance places the quality and reliability of data front and center within the compliance function.
- Where solutions are powered by sufficiently comprehensive data, they can uncover previously hidden connections between beneficial owners.
Strict global anti-money laundering and financial crime regulations require organizations to understand exactly who they are doing business with at all times. This ensures they do not inadvertently engage with financial criminals and allow corruption to perpetuate.
Criminals, however, often successfully hide behind complex corporate structures that obscure their true identities, allowing them to continue to engage in illicit activities. This is one of the reasons that financial crime remains pervasive.
Organizations must therefore ensure that they form an accurate picture of risk by identifying the true owners of entities before establishing any business relationship.
Failure to comply with applicable beneficial ownership laws and regulations brings with it a multitude of risks, which may include enforcement action, significant fines and even severe reputational damage.
Watch: Ultimate Beneficial Ownership (UBO) with Refinitiv
Challenge of UBO compliance
For compliance teams, the identification of UBOs in complex and multi-layered ownership structures can be difficult and time-consuming. Moreover, remaining compliant with stringent UBO regulations has many challenges:
- Ownership information may be fragmented.
- Information stored in different forms and locations is difficult to find.
- Jurisdictions have differing methods of defining and recording beneficial ownership.
Entity screening and subsequent UBO validation can be manual and cumbersome due to multiple systems and platforms.
Organizations need to find efficient ways to cut through complexity and ensure that they remain on the right side of the law.
A best-practice approach to achieving this begins with securing access to robust, verifiable and complete UBO data so that compliance teams can map out and visualize holistic ownership hierarchies.
Identifying all UBOs within applicable jurisdictional thresholds is just the first step.
Once identified, these beneficial owners should be screened against global sanctions, watch and enforcement lists, or any potential links to financial crime; and moreover should be checked for exposure to politically exposed persons.
In the event that heightened risk is detected, enhanced due diligence should be carried out to drill down and deliver more in-depth information on identified subjects.
Key UBO compliance questions
A data-driven approach to UBO compliance places the quality and reliability of data front and center within the compliance function, but many organizations struggle to access sufficient reliable UBO information.
Compliance teams should ask themselves:
- Is the data we currently use to identify a UBO accurate, verifiable and up-to-date?
- Is our current data coverage global?
- Does our data detail corporate associations and networks as well as share ownership?
- Does our data help us to make quicker business decisions?
Developing a data-driven approach leads to more confident decision-making. Compliance teams have the assurance that they can rely on information to help them form a holistic view of potential risk and protect their organizations against potentially devastating financial and reputational damage.
Best-in-class UBO data
Where solutions are powered by sufficiently comprehensive data, they can uncover previously hidden connections between beneficial owners.
To support this data-centric approach, Refinitiv will shortly be launching a new opt-in feature within World-Check One that delivers best-in-class UBO data across more than 215 countries for truly global coverage.
This data unlocks more than 100 million connections, providing insights into corporate entities and beneficial owners across the globe, with calculations down to 0.01 percent and the ability to quickly identify the ultimate beneficiaries of any entity and immediately screen them against market-leading risk intelligence on a single platform.
Complying with stringent UBO laws and regulations is a complex undertaking, with severe consequences for those that fail.
The ability to peel back the layers of often opaque business structures to reveal ultimate beneficial ownership or controllership is becoming a key component of global efforts to combat financial crime.
Robust, trusted data is the foundation of success in this important task.