Ultimate Beneficial Owner (UBO)

Compliance Guide for UAE Businesses

The Ultimate Beneficial Owner (UBO) rules in the UAE require companies to maintain accurate records and report their UBOs to ensure transparency and comply with anti-money laundering (AML) laws. This guide will walk you through the entire process, from identifying UBOs to reporting and maintaining registers, with templates and actionable steps to simplify compliance.

Intro

Identifying Your UBO

A Practical Approach

To comply with UBO regulations, the first step is to identify who your UBOs are. In most cases, a UBO is an individual who owns or controls 25% or more of a company’s shares, voting rights, or ownership interest.

Actionable Steps:

• Step 1: Review the company's shareholder structure to identify individuals who meet the 25% ownership/control threshold.

• Step 2: If no individual meets the 25% threshold, identify any persons who exercise control through indirect means (such as through subsidiaries or other entities).

• Step 3: Document how control or ownership is held, whether directly or indirectly.

Pro Tip:

For complex structures, use ownership charts or diagrams to map out indirect ownership. Tools like Lucidchart can help visualize the ownership structure, making it easier to identify UBOs.

Creating and Maintaining Your UBO Register

Every company must maintain an internal UBO register containing up-to-date information on the identified UBOs. This register must be kept secure and should be available for submission to authorities upon request.

Actionable Steps:

• Step 1: Use the UBO Identification Form to populate your UBO register.

• Step 2: Store the register in a secure location, either digitally or physically. Ensure only authorized personnel can access it.

• Step 3: Update the register whenever there is a change in UBO information, such as ownership transfers, new UBOs, or changes in control.

Pro Tip:

Review the UBO register annually or more frequently if there are significant changes in ownership or control. Always date your updates to ensure compliance with reporting timelines.

UBO Reporting Requirements

In the UAE, UBO information must be reported to the relevant authorities, such as the Ministry of Economy or free zone authorities. You are required to submit UBO data when forming the company and update it whenever changes occur.

Actionable Steps:

• Step 1: Submit your UBO register to the authorities within 60 days of company incorporation.

• Step 2: Update the UBO register within 15 days if there are changes in ownership or control.

• Step 3: Ensure all forms and data submitted match the internal UBO register for consistency.

Updating UBO Information:

Change Notification Process

It’s important to notify the authorities promptly when UBO information changes.

Actionable Steps:

• Step 1: Within 15 days of any UBO change (e.g., transfer of shares, appointment of new owners), update the UBO register internally.

• Step 2: Submit a change notification to the relevant authority, using the same format as the original UBO Declaration Form.

• Step 3: Include supporting documents such as updated shareholding agreements or corporate resolutions when submitting the change.

Handling Complex Corporate Structures

For businesses with complex ownership structures involving multiple layers, identifying the UBO can be more difficult. Companies must trace through each layer of ownership until the natural person who controls the business is identified.

Actionable Steps:

• Step 1: Obtain ownership charts or corporate documents that show the flow of ownership through various entities.

• Step 2: Identify the individuals who control the entities in each layer of the structure, focusing on the final natural persons behind these entities.

• Step 3: Verify the identity of these individuals and document how they exercise control, either directly or indirectly.

Pro Tip:

For complex ownership structures, create a UBO Ownership Flowchart showing each layer and the connections between them. This can be submitted alongside the UBO register to clarify how the UBO was identified.

Penalties for Non-Compliance with UBO Regulations

Failure to comply with UBO regulations can result in significant fines, business disruptions, and other penalties.

Actionable Steps:

• Step 1: Regularly review and update your UBO register to avoid fines for outdated information.

• Step 2: Ensure timely submissions and updates to authorities. Missing deadlines for submitting or updating UBO information can result in fines ranging from AED 50,000 to AED 1,000,000.

• Step 3: If unsure, consult a compliance specialist to ensure that your company meets all UBO requirements.