Who is an ultimate beneficial owner (UBO)?
An ultimate beneficial owner (UBO) is a natural person who ultimately owns or controls a company, directly or through other entities. In the EU and the United States, anyone holding 25% or more of the shares or voting rights is usually a UBO, as is a person with significant control. Payment providers must identify UBOs during KYB.
In detail
An ultimate beneficial owner (UBO) is the natural person who ultimately owns or controls a legal entity. A UBO is always a human being, never a company: if a merchant is owned by a holding, the UBO search continues up the chain until it reaches people.
How UBOs are identified
- Ownership: under the EU AMLR, a shareholding or controlling interest of 25% or more triggers UBO status.
- Control: a person who controls the company by other means, such as voting agreements or the right to appoint directors, is also a UBO.
- Fallback: if no one meets these tests, a senior manager is recorded instead.
Why it matters in payments
Acquirers, PSPs and PayFacs must know who really benefits from the money they settle. Each UBO goes through identity verification and sanctions screening. In the United States, banks must identify every owner of 25% or more and one person with significant control.
See KYC vs KYB and how KYB forms and questionnaires collect ownership data.