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Dubai: In the past few years the number of reports featuring indications of financial frauds has increased dramatically, and countering such frauds has become top priorities for regulators in recent years. Fraudulent parties use off-shore accounts to mask their activity and investigators regularly trace suspicious transactions to fictional addresses or the private homes of unsuspecting residents.

While the exact specifications vary depending on the jurisdiction and fraud regulation standards, companies must supply full and up-to-date information that includes the firm’s registration number, name, address, official status and the names of top management employees for verification of legitimacy and accuracy – to avoid falling under the regulatory purview of suspicious activity.

UBO norms helps counter fraud

With an industry-wide clampdown for banks and corporations to know who they do business with, this is why firms or lenders now go through UBO or ‘Ultimate Beneficial Owner’ checks or disclose their UBO identity for any of their business transactions, failure to do so resulting in steep fines.

What is a UBO or ‘Ultimate Beneficial Owner’?
A UBO or ‘Ultimate Beneficial Owner’ is the person or entity that is the ultimate beneficiary when a financial transaction is initiated. A UBO of a registered company is a person who holds a minimum 25 per cent of the company’s wealth, or at least a similar-sized voting power or ownership stake among other shareholders and benefits from receiving minimum 25 per cent of said firm’s money.

If no one meets the condition above, then any natural person who has the power to control the company using any other means may be termed as the UBO. In cases where UBO cannot be identified through the two conditions above, then a natural person who holds the highest management position in the company may be deemed as the UBO.

UBO regulations in the UAE

In the UAE, the government recently replaced a resolution relating to disclosure guidelines for any Ultimate Beneficial Owner, which covers the most updated requirements for entities in UAE to disclose its beneficial owners, intended to enhance transparency of the UAE registered entities.

On the other hand, there are entities which are exempted with this resolution. They are as follows: the companies in financial free zones like Abu Dhabi Gold Markets and Dubai International Financial Centre, and the companies which are directly or indirectly owned by the Federal or Emirate Government. Entities will need to assess who constitutes a UBO.

The UAE Cabinet passed a resolution this year, compulsorily seeking all firms to keep in their main offices registers on partners or shareholders, stating the information about the ownership interests and voting rights held by each individual.

Businesses are also asked to keep similar register on the top shareholder or main investor (25 per cent stake or more) of the company, while providing the relevant reason behind being majority owners of the company and directors, and date since they become one. Similarly, similar registers are to be kept for all other director of the company and nominated members, if any.

Deadline looms!

All of the above confidential information, while being accurate, should be submitted by no later than October 27, which is tomorrow. If there any changes to the information after you submit, it should be updated within 15 days.

Moreover, all business owners are also required to provide a contact details of an individual, who is compulsorily a resident in the UAE, with whom the authority can contact regarding any clarification on the information provided. If entities failed to comply with the Resolution, the UAE Ministry of Economy possibly enforce sanctions on those entities. The list of administrative sanctions is yet to be issued.