UBO

The natural person(s) who ultimately own or control a legal entity, directly or through a chain of ownership or other means of control. EU AML directives define a UBO as someone holding more than 25% of shares or voting rights, or who exercises control by other means. Identifying UBOs requires looking through layers of corporate ownership. Failure to identify UBOs is a major AML compliance breach.

EU member states are required to maintain central registers of beneficial ownership data accessible to competent authorities, financial institutions conducting CDD, and — under the 5th AMLD — the general public. In France, the Registre des Bénéficiaires Effectifs (RBE), managed by INPI, requires companies to declare UBOs and update filings within 30 days of any change. In Luxembourg, the Registre des Bénéficiaires Effectifs (RBE) is maintained by the Luxembourg Business Registers.

The 25% threshold is a default; a person can be a UBO with less than 25% if they exercise effective control through other means — for example, through voting agreements, veto rights, the power to appoint or remove the majority of the board, or a contractual right to receive the majority of profits. In investment funds, the GP (General Partner) is typically the UBO of fund vehicles even without economic ownership.

For M&A and private equity professionals, UBO verification is critical during due diligence. Shell companies in offshore jurisdictions (British Virgin Islands, Cayman Islands, Panama) are common red flags. The FinCEN beneficial ownership rule (effective 2024) in the US now requires most US entities to file UBO information with FinCEN under the Corporate Transparency Act — a major shift toward US-style transparency.

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