What is Ultimate beneficial owner (UBO)?

An Ultimate Beneficial Owner (UBO) refers to the individual or individuals who ultimately own or control a company or legal entity, even if the company is held through layers of intermediaries or other entities. The UBO is the person who enjoys the benefits of ownership, such as receiving profits, dividends, or exercising significant control, and who is entitled to the rights associated with the ownership of shares or assets, even if they do not appear directly in public records.

Identifying the UBO is important for financial institutions, regulatory authorities, and businesses to ensure transparency and prevent illegal activities such as money laundering, tax evasion, and terrorist financing.

Key Features of an Ultimate Beneficial Owner (UBO)

  • Ownership or Control: The UBO is typically someone who holds a direct or indirect ownership stake in a company, typically more than a certain percentage of shares (often 25% or more), or who has significant influence over the company’s decision-making processes.
  • Transparency and Reporting: Many jurisdictions require companies to identify and disclose their UBOs to regulatory bodies, especially when conducting transactions that involve large sums of money, such as opening bank accounts or acquiring assets. This is part of global efforts to improve transparency and combat financial crimes.
  • Control through Other Means: In some cases, the UBO may not directly own shares but may exercise control through other means, such as voting rights or management influence. This is often seen in family-owned businesses or entities with complex ownership structures.
  • Legal Requirement for Disclosure: In many countries, laws and regulations require businesses to keep records of their UBOs and to disclose this information upon request to authorities, such as tax or financial regulators. This ensures that businesses are not used for illicit purposes and helps ensure compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Ultimate Beneficial Owner (UBO) in Switzerland

Switzerland, in line with international standards, has stringent regulations regarding the identification and reporting of UBOs. The Swiss Financial Market Supervisory Authority (FINMA) and the Swiss Anti-Money Laundering Act (AMLA) require financial institutions and businesses to conduct thorough due diligence to identify the UBOs of their clients and customers.

Swiss companies are obligated to disclose their UBOs when interacting with banks or engaging in business transactions that involve significant amounts of money. This disclosure helps prevent the use of Swiss financial services for illicit activities like money laundering, tax evasion, or the funding of terrorism.

Switzerland has implemented a centralized register of beneficial owners for certain types of entities, which allows authorities to access information about the UBOs of Swiss companies, trusts, and foundations. This is part of Switzerland’s commitment to global transparency standards, including the Financial Action Task Force (FATF) recommendations, and the Common Reporting Standard (CRS) for tax compliance.

In addition to legal and regulatory requirements, knowing the UBO is critical for Swiss businesses in ensuring compliance with both domestic and international anti-money laundering regulations, maintaining the integrity of business operations, and fostering trust in the Swiss financial system.

Overall, identifying the UBO is crucial for improving transparency, protecting businesses from criminal activities, and adhering to global regulatory standards.