A new Refinitiv webinar, now available on-demand, examines the many challenges companies face to comply with ultimate beneficial ownership (UBO) regulations.
- Promoting UBO transparency is crucial, but authorities rely largely on financial institutions to supply beneficial ownership information — this may be incomplete and inaccurate, ultimately thwarting efforts to track down criminals.
- The webinar also takes a closer look at the Refinitiv World-Check One integrated beneficial ownership identification and screening opt-in feature, UBO Check.
- Enhanced due diligence combined with human intelligence can deliver critical insights when conducting beneficial ownership checks on higher risk subject.
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Today’s beneficial ownership challenges are addressed by experts in a new wide-ranging webinar examining the policy and practical issues surrounding ultimate beneficial ownership (UBO) identification and verification.
Sessions include a closer look at our new beneficial ownership screening tool. We also show how enhanced due diligence checks can add critical insight in identifying beneficial ownership.
The webinar speakers are:
- Sylwia Wolos, Director, Enhanced Due Diligence
- Evelyne Tuck, Senior Product Manager
- Michael Meadon, Market Development Manager
- Maíra Martini, Senior Policy Advisor, Transparency International
The beneficial ownership challenges
Financial criminals are adept at using often multi-layered and multi-jurisdictional legal structures, including shelf and shell companies, to launder illicit funds.
Carefully constructed layers of complexity can muddy the waters and obscure the identities of the real beneficial owners of these entities, allowing financial crime to flourish.
Corruption such as this is costing governments, societies and companies trillions of dollars every year and remains a far-reaching phenomenon that affects countries the world over.
For this reason the Financial Action Task Force (FATF) and global regulators require financial institutions (FIs) and other obliged institutions to identify, verify, and screen ultimate beneficial owners, because by identifying the individuals who ultimately stand to benefit from corruption, obliged firms can expose criminals and fight back against financial crime.
According to the UN, US$2.6 trillion per annum is stolen as a result of corruption and Refinitiv research reveals that US$1.3 trillion is spent each year fighting corruption and financial crime.
UBO policy challenges
Promoting UBO transparency is crucial, but many authorities across the globe rely largely on banks and financial institutions to supply beneficial ownership information — and this information may be incomplete and inaccurate, ultimately thwarting efforts to track down criminals.
Investigations can further be hampered by extensive time delays, especially in cases where it is necessary to obtain a court order to access the necessary information.
On a more positive note, countries where a beneficial ownership register is in place are far more able to support enforcement action because of enhanced access to ownership information.
Public beneficial ownership registers offer many other benefits, too. They speed up processes and support transparency, but challenges nonetheless exist in terms of whether the information recorded in the register is complete and reliable.
Accessing reliable UBO data
FATF’s Recommendation 10 stipulates that UBOs must be identified and verified, but once again, access to reliable and complete UBO data is often a significant challenge as a result of several factors — information may be difficult to find, fragmented, or stored in different locations, and different jurisdictions often have differing methods of defining and recording ownership.
The three broad methods used to obtain UBO data are all subject to challenges and include:
- Asking the client, but this is time consuming and data is usually non-standardized. Moreover, clients with something to hide will likely not supply accurate information.
- Utilizing a data aggregator, but coverage may be partial, and information may be out of date.
- Engaging in sideways research — in other words using a wide range of secondary sources and registries — but again, this can quickly become a manual, time-consuming and costly undertaking.
New approach to UBO screening
Refinitiv developed an integrated beneficial ownership identification and screening opt-in feature on its award winning World-Check One screening platform.
This feature, UBO Check, combines Dun & Bradstreet UBO data and World-Check Risk Intelligence data, allowing users to quickly identify or verify the beneficial ownership of entities and then screen them for potential risk — all on a single platform.
Watch: Beneficial ownership screening with Refinitiv World-Check One
While one should remember that screening alone can never eradicate financial crime, it is nonetheless regarded as a key control to detect and prevent money laundering.
Enhanced Due Diligence checks
Where beneficial ownership research and screening identify potentially heightened risk, Enhanced Due Diligence (EDD) background checks can help organizations to form a more complete view of actual risk.
EDD should be conducted using reliable primary and secondary sources, and research should be tailored to be more or less complex depending on the nature and extent of the perceived risk in line with a firm’s risk-based approach.
Whilst in low-risk situations, a basic understanding of a subject will probably suffice, in high-risk scenarios, EDD should involve detailed background checks and information on the reputation of the subject.
When conducting EDD, firms should also remember that this vital component of compliance should always be enhanced by invaluable human intelligence, which can deliver critical insights and help organizations to form a truly holistic picture of risk before entering into any form of business relationship.