Blogs
21st August 2023
In an era where regulated businesses are increasingly seeking transparency from their trading partners to ensure compliance with regulatory requirements and AML obligations, challenges in identifying Ultimate Beneficial Owners (UBOs), Directors and Officers are leading to a lack of oversight and governance. These mechanisms play a pivotal role in preventing financial crimes, promoting accountability, and ensuring ethical business practices. Now, with the advent of RegTech, these processes have been streamlined and enhanced, underscoring the critical importance of transparency in today’s corporate world.
Ultimate Beneficial Ownership refers to ‘an individual or entity that ultimately owns or controls a company or organisation, regardless of who is listed as the legal owner.’ This helps unveil the true owners behind an entity, thwarting attempts at money laundering, fraud, and tax evasion. UBOs hold particular significance in tax havens, where individuals and businesses might utilise intricate legal structures to mask assets and avoid tax obligations. Directors and Officers Declarations, on the other hand, relate to the disclosure of individuals in Director or Officer roles at an organisation, which is vital for transparency, accountability, and aids in identifying conflicts of interest.
Some companies may choose not to share this data due to concerns about disclosing sensitive ownership information, protecting competitive advantage, or avoiding potential legal or regulatory risks.
Moreover, information about Directors is not always available on a uniform register, and the filing of such data varies across countries, often posing challenges for retrieval. Furthermore, apart from the UK, many countries lack a comprehensive public UBO register.
Disclosing UBOs, Directors and Officers of a company is a fundamental aspect of corporate governance, promoting integrity, accountability, and responsible business practices. Here, we highlight the importance of transparency:
These declarations play a pivotal role in the fight against financial crimes such as money laundering, corruption, and terrorist financing. By tracing the ownership and business hierarchy, authorities can swiftly detect and prevent illicit activities.
Transparent disclosure mechanisms hold company stakeholders accountable for their actions. When UBOs, Directors and Officers are declared, it creates a culture of responsibility and prevents individuals from exploiting their positions for personal gain.
Transparent ownership structures are integral to maintaining ethical business practices. Stakeholders, investors, and customers are more likely to engage with companies that are honest about their ownership and leadership affiliations
Suppliers, partners, and customers want to know who the UBOs, Directors and Officers are before commencing a business relationship. Transparent disclosure can facilitate smoother interactions and faster onboarding experiences.
Trust is the cornerstone of any successful business. By adhering to regulations, companies build trust among investors, partners, and the general public. This, in turn, enhances the reputation and credibility of the business.
With requirements from global regulators to identify, verify and screen these individuals, coupled with ensuring the monitoring of ownership and people changes, regulated businesses are battling with navigating the challenging and complex landscape. Challenges surrounding accessing data, navigating ownership structures, periodic reviews and ad-hoc monitoring are preventing businesses from obtaining the data they require on their trading partners to ensure compliance with AML obligations.
In the complex world of business, RegTech is a game-changer. By employing cutting-edge solutions to simplify and automate compliance processes, RegTech is powering counter financial crime processes.
Companies are able to request verified data on UBOs, Directors and Officers from subject company officials to understand who owns and runs companies. This allows firms to make risk-based assessments before starting a business relationship. Onboarding new counterparties is then accelerated through a fully digital onboarding journey that includes a seamless UBO, Directors & Officers verification process.
Businesses are then able to carry out continuous enhanced due diligence on these individuals throughout the customer lifecycle, through Sanctions, PEPs and Adverse Media Screening. Alerts are automatically sent to users’ inboxes, notifying of any changes or concerning activity, to ensure a continual AML compliant and risk-free compliance model.
Through RegTech’s centralised approach to compliance, operational efficiency is vastly improved by managing all UBO, Directors and Officers identification and screening in one place, strengthening oversight and ensuring accuracy.
The sensitive nature of this information calls for forceful data security measures. RegTech platforms also ensure the safeguarding of information from potential breaches through robust cybersecurity protocols.
In the intricate web of modern business, transparency is not just an ideal but a necessity. RegTech’s advancements in identifying and monitoring UBOs, Directors and Officers are indispensable tools to ensure transparency and AML compliance and create a trustworthy and accountable corporate landscape. Access to these declarations and screening of individuals not only prevent financial crimes but also nurture ethical practices and build confidence among stakeholders. In a world where trust is a valuable commodity, embracing RegTech solutions to understand UBOs, Directors and Officers is a stride towards a brighter, more transparent future.
The REG Network’s Declarations feature allows you to obtain verified declarations on Directors, Officers and UBOs in real-time, increasing transparency and meeting AML obligations.
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