Since this year, organizations are required to register their Ultimate Beneficial Owners (UBOs) in the UBO register. But due to terrorism, as an entrepreneur, you also need to verify the UBOs of your customers and suppliers. Here are ten things every entrepreneur should know about UBOs.
What is a UBO?
UBO stands for Ultimate Beneficial Owner. In other words, the ultimate beneficiaries of an organization. These are people with more than a quarter of the shares in a limited company or an interest in a general partnership.
Why the UBO?
The UBO requirement stems from the Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft). As the Tax Authority states: this type of crime disrupts the economy and society. Therefore, the Tax Authority wants to make money laundering and terrorist financing more difficult.
Why do you want to know the UBO of a customer?
Since this year, companies are required to register a UBO or UBOs in the so-called UBO register. “But as an organization, you also need to ensure you know who you are doing business with,” says Hans-Peter Vloemans, Managing Director of CreditDevice International. “You need to know if you are doing business with a terrorist or someone linked to terrorism.”
How do you determine the UBO?
The process of ‘who are you doing business with’ is also known as Customer Due Diligence (CDD) or Know Your Customer (KYC) and consists of three parts:
- Who are you doing business with?
- Who are the UBOs?
- Are the UBOs on any sanction lists from, for example, the AFM or CIA?
What if a UBO is on a sanction list?
According to Vloemans, the actions to take are not fixed. “For example, it is not necessarily stated that you cannot do business. Sometimes there is a reporting obligation. But generally, as an entrepreneur, you want to stay far away from terrorism.”
Is it complicated to determine the UBOs?
Yes, says Vloemans. “Especially if you do business internationally.” But even in the Netherlands, it can be quite complicated. Sometimes business structures consist of ten layers: limited companies, holdings, and an administrative trust foundation on top. “Try finding out who the UBOs are then.”
The Financial Supervision Office (BFT) can then come knocking. Certain professions are under extra scrutiny: banks, insurers, financial advisors, lawyers, and notaries. Those who do not comply with the rules can expect a fine from the supervisor. What also plays a role nowadays is reputational damage. Several companies have come into the news negatively this way in recent years.
How can CreditDevice help?
“If you need to do a UBO check multiple times a year, you want to automate it,” says Vloemans. CreditDevice can check an organization’s customer base. “If we already have a connection with the accounting package, we can automate this process. If not, an organization can provide a customer list, for example via Excel.” CreditDevice checks who the UBOs are and can verify whether these UBOs are on international lists.
What if there is no UBO?
That is possible; there is not always a UBO. “For example, because the shareholder is a bank or investment fund,” says Vloemans. Or if the shares are fragmented. “Suppose there are ten people each holding ten percent of the shares, then there is no UBO. In that case, we indicate who the stakeholders are and what their background is.”
For which companies is the UBO service interesting?
The need for automation is more present in larger companies. “From a thousand relationships or more,” says Vloemans. “It quickly takes a few hours per customer to get relevant information, and from a thousand customers, it takes serious time. Then automating is cheaper anyway.” Moreover, software provides better insight. “If you need to repeat the UBO process periodically, you mainly want to know about changes. So you can take action on them.”
Want to know how much you can save with CreditDevice’s UBO service? Contact CreditDevice now without obligation.
