An Ultimate Beneficial Owner (UBO) is the individual  or individuals  who ultimately own or control a business, even if they are not listed as directors or legal representatives. In merchant onboarding and KYB processes, identifying UBOs is essential to ensure transparency and assess financial crime risk.

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UBOs are typically defined as people who:

• Own 25% or more of the company’s shares or voting rights (thresholds may vary by jurisdiction)
  
• Exercise control through ownership structures or legal arrangements
  
• Benefit financially from the company’s operations
  
  

For payment providers, uncovering and screening UBOs is a regulatory requirement under AML and KYC frameworks. This includes performing:

• Identity verification
  
• PEP and sanctions screening
  
• Adverse media checks
  
• Ongoing monitoring for changes in ownership or risk status

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Failing to identify or screen UBOs properly may result in onboarding shell companies, sanctioned entities, or businesses used as fronts for illicit activity. For example, a low-risk retail site might be controlled by a hidden UBO involved in a banned industry  making proper UBO discovery critical to understanding who’s truly behind a merchant account.

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