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The Value of Shareholding Information within KYC

The Value of Shareholding Information within KYC

Disclosing Ultimate Beneficial Ownership (UBO) for legal entities who deal with financial institutions (FIs) is a requirement part of the customer due diligence process as per the FinCEN Final Rule in the US and the 4th AML directive requirements in Europe and other jurisdictions. Globally, cases such as the Paradise Papers and Unaoil reemphasize the need for deep and thorough customer due diligence.

The underlying reason for this provision is preventing natural persons with malicious intentions, such as money-laundering or financing terrorism, from being able to hide behind a company, foundation or other legal entity and from a decision making aspect it is of utmost importance for financial institutions to understand potential clients, to be able to access the potential risk of doing business with them thoroughly and decide whether to onboard the client or not.

Who are UBOs? And why are they Important?

A UBO refers to any person who either directly or indirectly ultimately holds ownership of an entity. Obtaining accurate beneficial ownership information is crucial to:

  • Ensure that the FIs are performing screening on all the interested parties and derive at an appropriate risk rating
  • Ensure FIs do not deal with UBOs having any connection with sanctioned entities or countries

Acquiring ownership information is not always straightforward. It is hard to establish the UBO of a company with its registered office in Liechtenstein or on the island of Vanuatu or Samoa due to their secrecy laws and multi-jurisdictional nature of the regulatory requirements makes it even more difficult to source the data.

Nevertheless, there are few ways to gather such information, and one such credible way for verifying such business information is from the valid shareholder documents as reliable and up-to-date shareholder information is critical for making the most informed decisions about whether or not to do business with a client.

Luckily compliance teams have data-driven solutions to speed and simplify Know Your Customer processes, including identifying the beneficial ownership. And one such solution is the KYC Lookup search engine which has access to over 100 million company records from more than 110 jurisdictions around the world.

The solution enables real-time identification and verification of company records through official registries. Using the unique company registration number, the KYC Lookup API pulls the data of the respective entity where the details of the company such as full legal name, date of incorporation, registered address and a link to the specific company registry are available.

KYC Lookup makes the whole process of data collection really easy because it sets you free from:

  • Taking the pain of discovering the local registry
  • Translating the websites from local language to English
  • Knowing the full legal name of the entity

In addition to verifying the business details of an entity, KYC Lookup has the ability to download the share register directly from the government registry for some countries, and reducing the risk of receiving forged documents as it directly fetches the documents from the authorities responsible for issuing them.

To learn more about KYC Lookup, please do visit the link below and get a feel of how we simplify the information retrieval process.

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