Behind every corporate customer is a human being who ultimately owns or controls it. Identifying that person—the ultimate beneficial owner, or UBO—is one of the most important and most difficult tasks in financial crime compliance. Criminals rarely launder money in their own names; they hide behind layers of companies, trusts, and nominees. For fintechs, payment institutions, and electronic money firms onboarding business customers, weak UBO verification is a direct path to sanctions exposure, regulatory penalties, and reputational harm. This 2026 guide explains what beneficial ownership means, how the regulatory landscape has shifted, and how compliance teams approach identifying, verifying, and monitoring beneficial owners.
This article is for general information only and does not constitute legal or regulatory advice. Requirements vary by jurisdiction and change over time; organizations should confirm their obligations with qualified advisers and current regulatory texts.
What Is a Beneficial Owner?
A beneficial owner is the natural person who ultimately owns or controls a legal entity, or on whose behalf a transaction is being conducted. The key word is ultimately. A company may be owned on paper by another company, which is owned by a trust, which is administered for the benefit of individuals. Beneficial ownership analysis follows that chain until it reaches the real people at the end of it.
Ownership and control are two distinct routes to beneficial ownership. A person can qualify through ownership—holding a sufficient percentage of shares or voting rights—or through control exercised by other means, such as the right to appoint or remove management, dominant influence through agreements, or acting as a controlling senior figure. A robust process tests for both; focusing only on shareholding misses those who control an entity without formally owning much of it.
Why UBO Verification Matters for Fintechs
Beneficial ownership sits at the heart of anti-money laundering and sanctions compliance. If you cannot see who is really behind a customer, you cannot meaningfully screen them against sanctions and watchlists, assess their risk, or detect when a seemingly ordinary business is a front. Opaque ownership structures are a recurring feature in money laundering, sanctions evasion, and the financing of illicit activity precisely because they defeat surface-level checks.
For fintechs that onboard businesses at speed and scale, the tension is acute: customers expect fast, digital onboarding, while regulators expect rigorous verification. Getting this balance right is central to a sound KYC and onboarding program, and beneficial ownership is one of its most demanding components.
The Regulatory Landscape in 2026
Beneficial ownership rules have tightened globally over the past few years, but they are far from uniform. Compliance teams operating across borders must track several regimes at once.
FATF Standards
The Financial Action Task Force sets the international baseline. In March 2022, FATF strengthened Recommendation 24, requiring countries to ensure that competent authorities have access to adequate, accurate, and up-to-date information on the true owners of companies, and encouraging approaches such as beneficial ownership registers. In February 2023, FATF enhanced Recommendation 25 on legal arrangements, such as trusts, to bring it broadly in line with the standard for legal persons. These recommendations underpin the 25% ownership threshold widely used as a starting point around the world.
The European Union
The EU’s AML package is a defining development for 2026 and beyond. The Anti-Money Laundering Regulation (Regulation (EU) 2024/1624) introduces directly applicable rules across all 27 Member States and becomes fully applicable on 10 July 2027. It clarifies the beneficial ownership threshold as “25% or more,” meaning a person holding exactly 25% now qualifies as a beneficial owner where they might previously have fallen just outside. The accompanying directive, AMLD6, requires national transposition on a staggered timeline, with beneficial ownership register provisions among the milestones. A new supervisor, the Anti-Money Laundering Authority (AMLA) in Frankfurt, is expected to begin direct supervision of certain high-risk entities from January 2028.
The United States
The US picture shifted significantly in 2025. Under the Corporate Transparency Act, FinCEN had required a broad range of companies to report beneficial ownership information. However, an interim final rule issued on 21 March 2025 redefined “reporting company” to include only entities formed under the law of a foreign country and registered to do business in the United States. As a result, entities created in the United States—and their beneficial owners—were exempted from the federal reporting requirement, with obligations now falling primarily on foreign reporting companies. FinCEN has indicated it intends to finalize the rule, so firms should watch for further change.
The practical lesson is that a beneficial ownership register, where one exists, is a useful input but not a substitute for your own verification. Coverage, accuracy, and access vary widely by country.
Identifying Beneficial Owners: A Practical Sequence
Identification generally proceeds in a logical order, working down the ownership and control chain.
- Map the ownership structure. Obtain the corporate structure and identify each layer of ownership and control, following intermediate entities rather than stopping at the first corporate shareholder.
- Apply the ownership test. Identify individuals meeting the applicable threshold—commonly 25% or more of shares or voting rights, directly or indirectly.
- Apply the control test. Identify anyone exercising control by other means, even without meeting the ownership threshold.
- Use the senior managing official fallback. Where no beneficial owner can be identified through ownership or control after exhausting all means, many frameworks require identifying the senior managing official as a last resort—documenting why the fallback was necessary.
Verifying Beneficial Owners
Identification tells you who the beneficial owners are; verification confirms that they are who they are claimed to be. Verification typically draws on a combination of sources rather than a single document:
- Corporate documents such as shareholder registers, incorporation records, and ownership declarations.
- Independent registries and reliable third-party data used to corroborate—not simply replace—customer-provided information.
- Identity verification of the individuals themselves, applying the same standards used for other customers.
A recurring principle in regulatory expectations is that firms should not rely solely on a public register. Where information is self-declared or drawn from a source of uncertain reliability, corroboration from an independent source strengthens the file. The depth of verification should reflect risk: higher-risk customers and structures warrant enhanced measures, an approach consistent with a risk-based customer assessment.
The Hard Cases: Complex and Opaque Structures
Straightforward companies with a single individual owner are easy. The challenge—and the risk—lives in complexity.
Layered Ownership
Chains of holding companies across multiple jurisdictions can obscure the ultimate owner. Each additional layer adds effort and opportunity for concealment, and calculating indirect ownership through several tiers requires care.
Trusts and Other Legal Arrangements
Trusts introduce multiple relevant parties—settlor, trustee, beneficiaries, and any controlling person—each of whom may need to be identified. FATF’s enhancement of Recommendation 25 reflects the attention these arrangements now receive.
Nominees and Hidden Control
Nominee shareholders and directors can mask the real parties in interest. Identifying control exercised through side agreements or informal influence is among the most difficult tasks in the field and often depends on a mix of documentation, screening, and sound judgment.
Ongoing Monitoring: UBO Is Not a One-Time Check
Ownership structures change—shares are transferred, entities are restructured, and controllers come and go. Treating beneficial ownership as a point-in-time onboarding step leaves a firm exposed to changes it never sees. Effective programs refresh beneficial ownership information periodically and in response to trigger events, and they screen identified owners on an ongoing basis against sanctions and other lists. This connects UBO work directly to sanctions screening and to broader monitoring across the customer lifecycle.
Where RegTech Helps—and Where Judgment Remains
Technology has made beneficial ownership work more scalable. Tools can retrieve corporate data, visualize ownership chains, calculate indirect holdings, and continuously screen identified individuals, reducing manual effort and speeding onboarding. The role of regulatory technology in this space is part of a wider shift we explore in our overview of how RegTech is reshaping compliance.
Yet automation has limits. Data quality varies by jurisdiction, structures can be deliberately deceptive, and the question of whether someone exercises “control” is often a matter of judgment rather than calculation. The strongest programs pair automation for scale with skilled analysts for the ambiguous cases—and document the reasoning behind their conclusions.
A Decision-Maker’s Checklist
| Area | Question to Ask |
|---|---|
| Thresholds | Are we applying the correct ownership threshold for each relevant jurisdiction? |
| Control | Do we test for control by means other than shareholding? |
| Corroboration | Do we independently corroborate self-declared ownership rather than rely on a register alone? |
| Complex structures | Do we follow ownership through every layer, including trusts and nominees? |
| Fallback | Do we document why a senior-managing-official fallback was used when applied? |
| Monitoring | Do we refresh and re-screen beneficial owners over time, not just at onboarding? |
Frequently Asked Questions
Is the 25% threshold a hard legal line everywhere?
No. Twenty-five percent is a widely used baseline, and the EU’s AMLR frames it as “25% or more,” but thresholds and definitions vary by jurisdiction, and lower thresholds or additional control tests can apply in higher-risk situations. Always confirm the standard applicable to your context.
Can we rely on a national beneficial ownership register?
Registers are a helpful input, but coverage, accuracy, and access differ by country, and regulators generally expect firms to verify rather than depend on a register alone. Treat register data as one source to be corroborated.
How often should beneficial ownership information be refreshed?
There is no single universal interval. Good practice ties refresh frequency to customer risk and to trigger events such as changes in ownership or adverse developments, with higher-risk relationships reviewed more often.
Conclusion
Ultimate beneficial ownership verification is where financial crime compliance becomes genuinely hard—and genuinely valuable. It requires following ownership and control to the real people behind an entity, corroborating what customers declare, handling complex structures with care, and monitoring for change over time. With FATF standards tightening, the EU’s AML package reshaping expectations toward 2027 and 2028, and the US framework in flux after 2025, firms that build disciplined, risk-based UBO processes now will be far better positioned than those treating it as a checkbox.
If your team is strengthening its beneficial ownership and onboarding controls, DanuSoft works with fintech and compliance teams to align verification processes with a risk-based, defensible approach.