UBO Identification UBO Identification

UBO Identification: Challenges & Best Practices 

In the fast-evolving world, business verification is challenging due to easy access to technology that allows the counterfeiting any original information. Scammers and fraudsters use these innovations for money laundering through fake identity verification. International watchdogs, including FATF and FinCEN, designed UBO identification to combat identity fraud. Its measures assist companies in onboarding business confidently. This ensures that businesses prevent money laundering fraudsters that use companies’ services to launder money for illicit activities. 

Verifying the real owners of the companies is absolute chaos. Finding out who runs the business from various owners is like a maze of corporate structure. This article will guide solving the complex companies’ ownership structure through advanced UBO verification checks. 

UBO Identification- Overview & Definition

Simply, companies have to verify the business’s ultimate beneficial owners (UBOs). UBO identification measures are designed according to country and company policies. These will assist onboarding companies in verifying business owners by cross-checking their information.  

But what is UBO? A person who owns 10-25% of the company shares can vote in the company’s decisions. There are various company ownership structures, but familiar limited liability companies (LLCs) are used in many businesses. This helps the owner disguise their identity and conduct the scams. They can conduct different scams and prevent them from unveiling their original identity. 

Importance of UBO Identification 

The UBO verification provides companies with in-depth information about the business and their owners. Particular information about the ultimate owners of the companies prevents financial institutes and private organizations from money laundering, including various financial crimes. This also gives them a risk assessment report to onboard only low-level risk companies. However, the condition is to verify company owners through adequate business verification measures. This not only protects companies from fraud but also boosts their reputation. 

  • Prevent financial crimes, including money laundering and terrorist financing. 
  • Enhance brand reputation and customer loyalty 
  • Ensure rigid regulatory compliance in national or international 
  • Guarantee the owner and the company is legitimate as well as exist in the real world
  • Streamline business onboarding while getting accurate results
  • UBO identification provides the risk level associated with the company and its owners

Challenges During UBO Identification 

Finding the hidden UBOs of the companies is not as simple as it looks. Businesses face various challenges to unveil the actual owner of the partner companies. Moreover, international and national regulations there are rigid measures introduced in UBO identification. These obligations make it more challenging to comply with UBO checks. Given below are the issues companies face during business verification:


During the UBO verification, companies must comply with various national and international regulations to conduct business verification adequately. However, these obligations constantly change with time to raise the security bar for criminals. Compliance with rules ensures companies that their partner is legitimate and avoids fines. Companies must comply according to their policies and international obligations. Complying with all of these various rigid rules is not an easy task for companies. It is costly and time-consuming, which damages the company’s reputation. 

Costly and Time-consuming 

As discussed earlier, compliance and adequate business verification take time and are costly for the companies. This damages the company’s reputation and leads them to loss. Because the industry which not provide accurate results and to lengthy during onboarding. Damage the reputations and customer lost their interest in the company. After all these, disobedience to regulations and not having a convenient onboarding experience increase the bounce rate of the customers. Clients appreciate the other companies and start relying on competitors, which provides streamlined business onboarding with a secure environment. 


For Complaince with International regulations, AML/CFT companies cross-check the owner’s data through various databases. Companies screen the information against AML, third-party, and financial crime databases for adequate verification results. These ensure the owners of the companies are not involved in illicit activities. It also confirms that the company and owner’s name are not in adverse media. Screening the information according to the policies is challenging because of various government and third-party databases. Moreover, there are vast amounts of adverse media sources, including social media, newspapers, press releases, etc. 

Best Practices to Overcome These Challenges 

Companies can not overpower these obstacles manually. They need advanced technology and machine learning to beat the scammers. Businesses and organizations using digital tools to onboard partner companies streamline the UBO identification process and blistering security. They can ensure compliance and screen business owners’ information, including collecting real-time information about the company. This allows businesses to quickly and effectively identify and onboard legitimate companies while excluding those who are attempting to commit fraud. This helps to reduce the risk of financial losses and reputational damage.