What Is an Ultimate Beneficial Owner (UBO)?

The UBO meaning in compliance is ultimate beneficial owner: the individual who ultimately owns or controls a company, directly or through other companies. In the UK and the EU, holding more than 25% of the shares or voting rights is the main test, but control by other means also counts. Payment providers must identify UBOs and take reasonable measures to verify their identity when they onboard a business customer.

What UBO Means in Business

UBO stands for ultimate beneficial owner. The word "ultimate" matters. If a company is owned by another company, the search continues up the chain until it reaches a person, so a UBO is always a natural person and never a company or a fund.

There are two separate routes to being a UBO. The first is ownership, which means holding a large enough share of the capital or the voting rights. The second is control, which means being able to direct the company in another way, for example by appointing most of the board.

In the UK, regulation 5 of the Money Laundering Regulations 2017 covers both routes for companies that are not listed on a regulated market. A beneficial owner is any individual who exercises ultimate control over the management of the company, who owns or controls more than 25% of its shares or voting rights (directly or indirectly), or who otherwise controls it.

A company can have several UBOs, or none who pass the ownership test. Both situations are common in holding structures and are covered below.

Legal Owner, Beneficial Owner and Director Compared

One person can hold several roles at once. A founder who owns 60% of the shares and sits on the board is a legal owner, a beneficial owner and a director.

Who Counts as a UBO Under UK and EU Rules

The core idea is the same in the UK and the EU, but the legal tests sit in different places. UK rules come from the Money Laundering Regulations 2017 and the Companies Act 2006. EU rules come from the Anti-Money Laundering Directive and, from 10 July 2027, the Anti-Money Laundering Regulation (AMLR).

Companies registered in Hong Kong or the UAE that trade with Europe should expect the same tests. A UK or EU provider applies its own anti-money laundering rules when it onboards a company, even if the holding company already reports its owners to a local registry.

The UK Test Through People With Significant Control

UK companies keep a register of people with significant control. Under the GOV.UK guidance on PSCs, an individual is a PSC if they meet one or more of these conditions:

• they hold more than 25% of the shares
• they hold more than 25% of the voting rights
• they can appoint or remove a majority of the directors
• they have, or actually exercise, significant influence or control over the company

Shareholdings are reported in bands: more than 25% up to 50%, more than 50% and less than 75%, and 75% or more. A company with no PSC must file a statement explaining why rather than leave the register blank. Since 18 November 2025, PSCs have to verify their identity with Companies House and provide a personal code, and changes to PSC details must be filed within 14 days.

The register is a starting point, not the end of the check. Under regulation 28 of the Money Laundering Regulations 2017, a provider cannot meet its beneficial ownership duties by relying only on information filed with a registrar.

The EU Test Under Anti-Money Laundering Rules

Under Article 3(6) of the Anti-Money Laundering Directive (EU) 2015/849, the beneficial owner of a company is the natural person who ultimately owns or controls it, through direct or indirect ownership or through control by other means. A holding of 25% plus one share, or an ownership interest of more than 25%, is an indication of direct ownership. Member States may set a lower percentage, so national rules can be stricter.

Each Member State keeps beneficial ownership information in a central register under Article 30 of the directive. From 10 July 2027, Regulation (EU) 2024/1624 brings in directly applicable rules and sets the threshold at 25% or more of the shares, voting rights or other ownership interest.

The change from "more than 25%" to "25% or more" only affects someone holding exactly 25%. From July 2027, EU providers will treat that person as a beneficial owner.

How Indirect Ownership Is Calculated

When shares are held through other companies, the rules look through the chain, but they do it in slightly different ways.

In the UK, Schedule 1A to the Companies Act 2006 treats a person as holding shares indirectly if they have a majority stake in the company that holds them, or in each company in a chain that ends with the shareholder. Under EU rules, a holding of more than 25% by a company that a person controls is an indication of indirect ownership by that person. Many providers also work out each owner's effective percentage by multiplying stakes along the chain as part of their risk assessment.

Anna owns 60% of HoldCo Ltd, and HoldCo owns 50% of OpCo Ltd. Her effective economic interest in OpCo works out as:

Anna also has a majority stake in HoldCo, so for PSC purposes she is treated as holding all of HoldCo's 50% in OpCo. On either view she is a UBO of OpCo.

Ben owns the other 40% of HoldCo and has no majority stake. His effective interest in OpCo is:

On these figures Ben is unlikely to be a UBO through ownership. He could still be one through control, for instance if a shareholder agreement lets him appoint most of OpCo's directors.

Providers usually look at a person's combined position. Someone who owns 10% of OpCo directly and also controls a company holding another 20% is likely to be treated as a beneficial owner.

When No One Reaches the 25% Threshold

Companies with many small shareholders, or with owners who each hold 25% or less, may have no UBO by ownership. That does not end the analysis. The next question is control: who can appoint the board, veto key decisions or direct the company through an agreement or a nominee arrangement.

If no one can be identified after all reasonable steps, both regimes fall back on management. Under EU rules, the senior managing official is recorded, provided there are no grounds for suspicion and the provider keeps records of the steps it took. In the UK, regulation 28 lets a provider treat the senior person responsible for managing the company as its beneficial owner once all possible means of identification have been exhausted.

At Companies House, a company in this position files a statement that it has no registrable PSC. Structures that include a trust follow separate rules and usually need extra documents.

Why Payment Providers Ask About Your Beneficial Owners

Customer due diligence (CDD) rules require payment providers to know who they are dealing with, including the people behind a company. In the UK, regulation 28 requires a provider to identify the beneficial owner, take reasonable measures to verify their identity and understand the ownership and control structure. Article 13 of the EU directive sets out the same duties.

A UBO check usually covers:

• identity, using a passport or national ID card
• residential address
• screening against sanctions lists
• checking whether the person is a politically exposed person (PEP)
• how the person's stake fits the ownership chart the company provided

Depending on the risk profile, the provider may also ask where the owners' money comes from. Our guide to source of wealth and source of funds checks explains what those requests involve. Checks are usually repeated when the ownership structure changes, because the provider has to keep its records current.

Documents Usually Requested for UBO Verification

The exact list depends on the provider and the jurisdiction, but most requests for a company with UBOs include:

• an ownership structure chart, dated and signed or stamped, showing every company up to the UBOs
• the register of shareholders or a certificate of shareholders
• certificates of incorporation for the company and each holding company in the chain
• proof of identity for each UBO, usually a clear colour scan of a passport
• proof of address for each UBO
• proof of identity and address for every shareholder holding 25% or more
• proof of identity for the other directors

Documents issued abroad may need an apostille or a certified translation if the provider asks for one. The details should also match public registers, so a shareholder who appears at Companies House but not on your chart will lead to follow-up questions. ABF Pay lists what it asks for on its page of documents required for a business account.

Common Reasons a UBO Check Takes Longer

1. The ownership chart does not match the register. A shareholder missing from either document is a frequent cause of follow-up questions, so compare them before you apply.
2. A holding company in another jurisdiction is not documented. Every company in the chain needs its own registration and shareholder documents.
3. Nominee shareholders are not disclosed. Where a nominee holds shares, the provider will ask for the nominee agreement and details of the person behind it.
4. Documents are out of date. An old proof of address, or a shareholder register that predates a recent share transfer, usually has to be replaced.
5. The register was not updated after a change of ownership. Filing the change with the registry first saves a round of questions.
6. A UBO is a PEP or has links to a high-risk jurisdiction. This leads to enhanced due diligence (EDD), which takes longer and needs more documents on the source of funds.

These checks are routine for companies in sectors that providers treat as higher risk. If that applies to you, see our notes on opening an account for a high-risk business.

How ABF Pay Handles UBO Information

When a company applies for a multi-currency business account with ABF Pay, it provides a dated ownership structure and identity and address documents for each UBO and each shareholder holding 25% or more. The KYC team may request further documents, and business verification can take up to 10 business days.

ABF Pay is registered with FINTRAC as a money services business (MSB No. M20767876). Companies from Hong Kong and the UAE can also ask about named IBAN accounts. If you are preparing an application, it helps to review the document list before you start.

Frequently Asked Questions

Sources

• The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, regulation 5 (legislation.gov.uk)
• The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, regulation 28 (legislation.gov.uk)
• People with significant control (PSCs) (GOV.UK)
• Companies Act 2006, Schedule 1A (legislation.gov.uk)
• Directive (EU) 2015/849, consolidated text (EUR-Lex)
• Regulation (EU) 2024/1624 (EUR-Lex)

This article is for information only and is not financial, legal or tax advice. ABF Pay is not a bank. Rules on beneficial ownership differ by jurisdiction, so check the requirements that apply to your company.