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Ultimate Beneficial Owner (UBO) UAE - What you should know?

Ultimate Beneficial Owner (UBO) UAE - What you should know?

5 months ago

09 June 2022

KPI

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    2022 Latest Update: Ultimate Beneficial Owner


    The deadline for providing data on ultimate beneficial owners, according to the Ministry of Economy, was June 30, 2021. The licensing authorities, however, are continuing to accept registrations. Many of the licensing authorities will require the information specified by the resolution when a company applies for trade license renewal or amendment.

    Introduction to Ultimate Beneficial Owner (UBO)


    Most countries around the world have legislation related to UBOs. The goal is to identify any illegal activities in the business. This is in accordance with money laundering, Know Your Customer (KYC), bribery, corruption, and terrorism financing legislation.

    The government, regulatory authorities, and other firms interested in doing business with an entity can learn about it by identifying the UBO. Thus, the primary goal of UBO regulation requirements is to safeguard oneself from engaging in business with an entity that may be engaged in criminal activities. You have a thorough understanding of who your business partner or client is and what their company operations are, which is critical.

    In line with the same, the UAE Cabinet released Cabinet Resolution No. 58 of 2020 on Regulation of Procedures Relating to Real Beneficiaries (“the Decision”) on August 28, 2020.

     

    What does the term Ultimate Beneficial Owner mean?


    The term Ultimate Beneficial Owner refers to the genuine beneficial owners, partners, and/or shareholders of an organization. As per the Cabinet Resolution, all companies incorporated in the UAE mainland and commercial free zones must keep track of their genuine beneficial owners, partners, and shareholders, according to the decision.

    9 things you must know about the UBO regulation in UAE


    Understanding the UBO regulation is essential for every company doing business in the UAE. The following are 9 crucial factors to remember under the UAE's UBO regulation:

    1. Applicability


    All UAE-licensed businesses, both mainland and free zones.

    2. Exemptions


    Companies licensed in ADGM & DIFC are exempt from this Decision since they already provide information to ADGM and DIFC concerning Real Beneficiaries/Ultimate Beneficial Owners.

    Companies incorporated in the financial free zones of Abu Dhabi Global Markets (ADGM) and Dubai International Financial Centre (DIFC) may be subject to a different set of regulations.

    Companies owned directly or indirectly by the government, whether federal or local, are excluded from this decision.

    3. Requirements


    Create and maintain a Register of Real Beneficiaries and a Register of Partners or Shareholders.

    Any changes in the details of beneficial owners, the legal person must be updated within 15 business days of the change coming into being.  

    4. Real Beneficiary

    As per Financial Action Task Force (FATF), the 'Ultimate Beneficial Owner' is defined as "the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is executed".

    Who is a UBO? Identifying the Ultimate Beneficial Owner (real beneficiary) in UAE


    A legal entity's Real Beneficiary or Ultimate Beneficial Owner is someone who:

    • Owns or controls 25% or more of the shares or voting rights;
    • Ultimately owns or controls, directly or indirectly, 25% or more of the shares or voting rights;
    • Holds the right, directly or indirectly, to appoint or remove most of the board of directors;
    • Has the right to exercise, or exercises, significant influence or control over the legal entity;
    • Exercises ultimate control over the management; or
    • Controls the legal entity

    Download the Declaration of the Beneficial Owner Form here

    5. Contents of Register of Real Beneficiary

    • Full name, nationality, date, and place of birth
    • Place of residence or address (for correspondence under this Decision)
    • Number of travel document or ID card, country and date of issue, and expiry date
    • The basis on which he became a Real Beneficiary of the legal person and the date when he acquired such capacity 
    • The date on which the person ceased to be the Real Beneficiary

    6. Contents of Register of Partners or Shareholders

    • Full name, nationality, date, and place of birth
    • Place of residence or address (for correspondence under this Decision)
    • Number of travel document or ID card, country and date of issue, and expiry date
    • Number of shares owned, category thereof, and the voting rights associated thereto
    • Date of acquisition of capacity as Partner or Shareholder
    • In case of Partner or Shareholder is a legal person, Name, legal form and Memorandum of Association, Address of the main office, Name of senior management personnel (and all personal identification documents) and in case of a foreign shareholder or Partner, name and address of the legal representative in UAE

    7. Timeline

    Register of Real Beneficiary and Register of Partners or Shareholders should be submitted to the respective Licensing Authority on or by 30 June 2021. The licensing authorities are still accepting registrations. When a company applies for renewal or amendment to its trade license, many of the licensing authorities will request information as specified in the Resolution.

    In the event of any changes, these registers should be updated and should be notified to the respective Licensing Authority within 15 business days.

    Registrations are still being accepted by the respective licensing authorities.

    8. Information Submission


    A natural person residing in the UAE must be authorized by the legal person to carry the responsibility of disclosing the relevant details of the Registers to the Registrar. The legal person must supply the Registrar with the natural person's name, contact information, address, and a copy of his or her identity card or passport.

    9. Administrative Penalties Submission


    Failure to furnish the requested information to the Licensing Authorities could result in administrative penalties and sanctions. The Ministry of the Economy (MoE) has indicated that non-compliance with the UBO resolution will result in the application of administrative sanctions. The Dubai Economic Department's website has a copy of the resolution which lists all the administrative penalties against violators as per the provision of the UBO regulation. To view and download the list of files, click here. (Go to Page 4)

    What does your business need to do to comply with UBO in UAE?


    Obtain a UBO Certificate:
    A UBO Certificate is awarded to an entity that successfully complies with UBO rules. The certificate verifies that the entity has validated its UBO and that it keeps track of its beneficial owners and other essential data. 

    Follow the right rules/procedure:
    At the time of onboarding or forming a new business connection, your company must follow procedures and processes to collect information about all individuals with substantial ownership or control.

    Steps for Ultimate Beneficial Owner Compliance and Reporting for UAE Businesses


    Maintain accurate and up-to-date information:
    It is advisable that businesses submit and maintain accurate and up-to-date information, as supplying inaccurate and misleading information will result in penalties. Aside from the charges, your organization may suffer a loss of reputation and client confidence. 

    Ultimate Beneficial Owner or UBO Compliance in UAE - Final Thoughts


    The implementation of legislation such as the Ultimate Beneficial Ownership is a step forward for the UAE in the fight against money laundering and the financing of terrorism and illegal activities. This decision is also consistent with the UAE's commitment to the OECD's BEPS measures.

    Various other legislation, such as Economic Substance Regulations, CbCR Reporting, and AML Regulations have been enacted by the government of UAE in recent quarters in order to increase transparency in business affairs. More transparency in the country's economic system is expected as businesses tighten their overall record-keeping and disclosures.

    Simplify UBO registration and compliance with KPI


    Our team can assist you with further advice and guidance on this regulation and development.
    Contact us if you have any questions. 

     

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    Icon5 months agoIcon 09 June 2022

    Ultimate Beneficial Owner (UBO) UAE - What you should know?

    Learn how to identify a UBO, comply with the UBO regulation, get a UBO certificate, penalties for non-compliance & more.

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