Know Who You Are Working with - Finding the Beneficial Owners and Ultimate Beneficial Owner

There is a saying, “what you don’t know won’t kill you”.

In some circumstances, this is a very untrue phrase.

When it comes to protecting our banks, financial system, and economy, ignorance is not bliss.

One of the best ways to protect ourselves is to learn about the ultimate beneficial owner for every company we do business with.

Read on to learn who a beneficial owner is, why we need to know them, and what else we can do to protect our economy.

What is a beneficial owner?

A beneficial owner is not only the legal owner of a business.

This is the person or people who stand to benefit the most from every transaction that occurs.

In most places, the beneficial owner is determined by identifying the person or people who has or receives at least 25% of the company’s capital gains or voting rights.

Having this much beneficial control means that the person has significant control and interest in the business.

In some places or businesses, the legal owner may not be the beneficial owner — this may be a company overseas or a board of people.

Finding the ultimate beneficial owner

Since there can be several beneficial owners, it is also important to identify the ultimate beneficial owner.

This is the person or separate entity who is ultimately benefited when the business transaction occurs.

They can be the person or entity who is in direct or indirect control of the company, is the shareholder, or has power of attorney.

At times, you may find that a wealthy owner puts a trust in charge of the business, therefore making it a bit harder to find the actual owner.

Why is it important?

It is important to find the beneficial owners of a business to ensure that the business is legitimate and not involved in any criminal activities.

Criminals have gotten smarter over the years.

They have learned they can hide behind the ruse of a business and get people to do as they wish.

When you know who you are working with, it is less likely that you stand a chance of losing money due to scams, money laundering, counterfeiting, or other financial crimes.

In most places, it is a legal obligation for banks, lenders, and any other financial institutions to do certain checks to know exactly who they are working with.

As a reminder, a beneficial owner is any person who has a major stock or ownership in a company.

The ultimate beneficial owner is the person or persons who own at least 25% of a company and its shares, has at least 25% of voting rights, and holds the power of attorney for the company.

By determining who the beneficial owner and ultimate beneficial owner are can help us to stop financial criminals from continuing on with their crimes.

If you work in a bank, financial institution, or any other business where you will be working hand in hand with another business, you should always do your due diligence to determine that the company is legitimate.