{"id":11014,"date":"2025-01-16T15:02:40","slug":"know-the-ultimate-beneficial-owner-protect-your-business-from-hidden-risks","title":{"rendered":"Know the ultimate beneficial owner, protect your business from hidden risks"},"content":{"rendered":"

\"ultimateThe disclosure of ultimate beneficial ownership (UBO) has come under the spotlight following the recent revelation of a tin corruption case in Indonesia, which has captured public attention over the past few months. In this case, which caused state losses amounting to 300 trillion rupiahs (equivalent to approximately 18.58 billion USD), the identification of UBO uncovered hidden flows of illicit funds concealed behind corporate structures.<\/span><\/p>\n

This underscores the critical importance of transparency in business management to prevent crimes such as corruption and money laundering.<\/span><\/p>\n

According to the Financial Action Task Force (FATF), the lack of transparency in beneficial ownership information enables the flow of approximately $1.6 trillion in illicit funds through the global financial system annually. This staggering figure highlights the necessity of BO screening to ensure compliance, mitigate risks, and promote ethical business practices.<\/span><\/p>\n

Understanding the Concept of Beneficial Ownership<\/span><\/strong><\/h2>\n

What is Beneficial Ownership?<\/span><\/h3>\n

The Organisation for Economic Co-operation and Development (OECD) categorizes beneficial owners into three distinct types:<\/span><\/p>\n

    \n
  1. In a Company: The beneficial owner (BO) is typically a shareholder or member.<\/span><\/li>\n
  2. In a Partnership: The BO is a partner, which can include both limited and general partners.<\/span><\/li>\n
  3. In a Trust or Foundation: The BO is identified as the founder.<\/span><\/li>\n<\/ol>\n

    In Indonesia, the definition of a beneficial owner can <\/span>refer to<\/a> Presidential Regulation No. 13\/2018. A Beneficial Owner is an individual who has control over the funds or shares of a corporation through three main authorities: (i) appointing or dismissing corporate management, (ii) controlling the corporation, and (iii) receiving benefits from the corporation, either directly or indirectly.<\/span><\/p>\n

    What is Ultimate Beneficial Ownership (UBO)?<\/span><\/h3>\n

    The definition of UBO can differ depending on the jurisdiction. For example, in the European Union (EU), beneficial ownership generally refers to individuals owning at least 15 percent plus one share in a company, voting rights, or other direct or indirect ownership.\u00a0<\/span><\/p>\n

    However, this rule is different for certain sectors. In extractive industries or companies that pose a higher risk of money laundering or terrorism financing, the ownership requirement to be considered a UBO is five percent plus one.<\/span><\/p>\n

    Meanwhile, in the USA Individuals who own or control at least 50% of the organization are deemed UBO and are required to disclose.<\/span><\/p>\n

    Basically, ultimate beneficial ownership (UBO) refers to individuals who ultimately benefit from or control the organizations. Identifying UBOs is a key component in understanding the complete ownership structure of an organization.<\/span><\/p>\n

    For example, Budi owns 60% of the shares in Company A. Then, Company A purchases 50% of the shares in Company B. As a result of this acquisition, Budi automatically has an indirect ownership of 30% in Company B, making him the UBO of Company B<\/p>\n

    In another example, Dewi owns only 10% of the shares in a company but has majority voting rights under the shareholders’ agreement. Since she can control the strategic decisions of the company, Dewi is considered a UBO.<\/span><\/p>\n

    The Difference Between Ultimate Beneficial Owner (UBO) and Beneficial Owner<\/span><\/h3>\n

    While both terms involve identifying individuals behind entities, the key distinction lies in depth. Beneficial ownership can include layers of ownership, such as trusts or subsidiaries. UBO focuses on uncovering the very last layer\u2014the ultimate owner.<\/span><\/p>\n

    What is UBO Screening?<\/span><\/strong><\/h2>\n

    UBO screening is the process of verifying and identifying the ultimate beneficial owners of a company. It involves gathering and analyzing data from various sources to ensure compliance with laws and regulations, detect potential risks, and establish transparency in business relationships.<\/span><\/p>\n

    Why do we need to identify UBO?<\/span><\/strong><\/h2>\n