A UBO (Ultimate Beneficial Owner) is the natural person who ultimately owns or controls an organisation. For a Dutch private or public limited company (BV or NV), this is someone who directly or indirectly holds more than 25% of the shares, voting rights or ownership interest, or who exercises actual control by other means. If no such person can be found, the senior managing officials count as pseudo-UBO.
Institutions subject to the Wwft must establish the UBO of every business customer. It is a standard part of KYC, which the Wwft calls cliëntenonderzoek (customer due diligence).
What counts as ownership or control
For a BV or NV, the rules name three types of interest. Someone is a UBO if they hold more than 25% of:
- the shares
- the voting rights
- the ownership interest, for example the right to profits or assets
In addition, someone can be a UBO through control by other means, even without a large shareholding. Think of a person who can appoint or dismiss directors under a shareholders' agreement, or who holds a veto over important decisions. Someone who formally owns nothing but in practice makes the decisions can also be a UBO.
It is always a human being. A holding company, fund or foundation is never the UBO itself. You look through it until you reach natural persons.
Adapted rules apply to foundations, associations, partnerships and trusts. The principle remains the same: who ultimately holds the interest or the control?
Indirect ownership through intermediate layers
Many customers have a structure with one or more holding companies. You then look through every layer.
An example. Person A holds 60% of the shares in Holding B. Holding B holds 50% of the shares in your customer C. A has a majority in B and therefore controls the interest of B in C. A is therefore a UBO of C.
The more layers, the harder it gets. Pay particular attention to:
- structures spread over several countries
- trusts and similar arrangements
- shares held by one person on behalf of another (nominee shareholders)
- persons acting together who each stay just below 25%
A complex structure without a clear business reason is a risk indicator. In that case, enhanced due diligence may be required.
What is a pseudo-UBO?
Sometimes you cannot find anyone who meets the criteria. For example with a listed company or a business with many small shareholders. You then designate the senior managing officials as pseudo-UBO, usually the statutory directors.
This is a last step, not a shortcut. You only take it once you have exhausted all possible means and there are no grounds for suspicion. Record which steps you took and why you did not find an actual UBO.
Why the UBO matters for KYC
Criminals like to hide behind legal entities. UBO research shows who is really behind a customer. Only when you know that can you do the rest of the investigation properly:
- you screen the UBO against sanctions lists
- you check whether the UBO is a politically exposed person (PEP)
- you assess whether the source of wealth fits the profile
- you determine the risk of the relationship
If you cannot establish the UBO, the customer due diligence is incomplete. The Wwft then does not allow you to enter into or continue the relationship.
How to establish the UBO
- Ask for the structure. Have the customer provide an overview of the ownership and control structure, often together with a UBO declaration.
- Consult the UBO register. Institutions subject to the Wwft can request a UBO extract from the KvK. Since the judgment of the Court of Justice of the European Union of 22 November 2022, the register is no longer open to the general public.
- Verify with other sources. Think of the Trade Register, the articles of association, the shareholders' register and foreign registers. You may not rely exclusively on the UBO register.
- Record the identity. Record the details of each UBO and take reasonable measures to verify their identity.
- Report discrepancies. If the UBO register differs from what you find yourself, you report this back to the KvK.
- Keep it up to date. A UBO can change through a sale or restructuring. Check the UBO at every periodic review and whenever there are signs of change.
Establishing the UBO yourself or outsourcing it
A simple structure with one or two shareholders is often handled well in house. With several layers, foreign entities or trusts, UBO research takes a lot of time and experience. Some organisations therefore have this work carried out by specialised analysts. The assessment of the file and the decision on the customer remain with you.