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The recurring request for your UBO details or a UBO extract may feel like unnecessary bureaucracy, but it is a legal obligation introduced to combat misuse of the financial system. Failure to comply with UBO regulations can result in significant fines.
UBO
“UBO” stands for “Ultimate Beneficial Owner,” referring to the natural person who ultimately owns or controls an organization. UBOs are individuals who hold an interest of 25% or more in a legal entity, whether through ownership or control.* In addition, there are so-called “pseudo-UBOs,” such as the director of a legal entity. Pseudo-UBOs are designated when no UBO can be identified through ownership or control. It is also important that the UBO(s) are actively registered. Certain service providers, including accountants and tax advisors, have a reporting obligation: if a client’s UBO registration is not in order, they must notify the Netherlands Chamber of Commerce (KVK). Failure to meet these obligations (both proper registration and reporting) is considered an economic offence, and can lead to substantial financial penalties.
* Ownership
Ownership means having a direct or indirect ownership interest in a company, for example by holding shares.
*Control
Control means having decisive influence over a company, even without formal ownership. This can include voting rights, the right to appoint or remove board members, or any other form of dominant or de facto influence.
Combating misuse
The primary purpose of maintaining a UBO register is to prevent and combat money laundering, related criminal activities, and the financing of terrorism. UBO registers record the natural persons who ultimately own or control legal entities. By linking these registers across the EU, the aim is to strengthen transparency and safeguard the financial system against abuse.
UBO information is used by supervisory authorities and investigative agencies, as well as by “gatekeepers” (institutions under the AMLD, such as banks, notaries, tax advisors, and accountants) that play an important role in preventing financial and economic crime.
No longer publicly accessible
You may recall that when the UBO register was introduced, it was publicly accessible. In response to legitimate concerns about privacy, the European Court of Justice ruled that access to UBO registers should be restricted. The Netherlands subsequently limited access to authorised authorities, AMLD-regulated institutions, and the UBO themselves. Due to technical issues, only FIU Netherlands, DNB, AFM, FIOD, the Tax Administration, the police, and the Public Prosecution Service currently have actual access; AMLD-regulated institutions generally do not (yet).
Access to the UBO register will be expanded to include administrative bodies and legal entities with public responsibilities. In addition, a decision will be introduced to grant access to other natural and legal persons, provided they can demonstrate a legitimate interest. Examples include journalists, civil society organizations, or parties seeking to enter into a business transaction. In principle, this keeps casual onlookers at bay.
Conclusion
When you are once again asked to confirm or provide your UBO registration, this is not mere box-ticking; it is simply a legal requirement. Non-compliance constitutes an economic offence, aimed at reducing fraud and abuse of the financial system. Given the time, effort, and costs involved, it is sincerely hoped that this goal will be achieved.
