--- title: "Beneficial Ownership | Altss Glossary" description: "Beneficial ownership is the ultimate ownership or control of a legal entity or arrangement by natural persons; in anti-money-laundering law a beneficial…" canonical: "https://altss.com/glossary/beneficial-ownership" --- Glossary · Legal, regulatory & tax # Beneficial Ownership Also called: UBO · ultimate beneficial owner Beneficial ownership is the ultimate ownership or control of a legal entity or arrangement by natural persons; in anti-money-laundering law a beneficial owner is always an individual, identified by jurisdiction-specific ownership (commonly 25%) or control tests. Publisher: Altss LLCPublished 2026-01-03Content modified 2026-10-02 ALTSS-REG-044 Companies, funds and trusts are often owned through chains of other entities. Beneficial ownership asks who stands at the end of the chain: which people own or control it. Banks and fund administrators must identify those people, registers in many countries record them, and securities and fund law use the phrase "beneficial owner" in their own, different senses. ## Jurisdiction and status | Regime | Who is a beneficial owner | Status on 1 October 2026 | | --- | --- | --- | | Financial Action Task Force (FATF) Recommendations 24 (legal persons, revised March 2022) and 25 (legal arrangements, revised February 2023) | Natural persons who ultimately own or control the entity or arrangement, through any chain; countries should ensure that adequate, accurate and up-to-date information is available to competent authorities | International standard, updated periodically; text cited here: edition updated February 2025 | | US FinCEN Customer Due Diligence (CDD) Rule, 31 CFR 1010.230 | Each individual owning, directly or indirectly, 25% or more of the equity of a legal-entity customer, plus one individual with significant responsibility to control it | In force; under FinCEN exceptive relief of 13 February 2026, beneficial owners are identified and verified when a legal-entity customer first opens an account, when the institution knows of facts that reasonably call previously obtained information into question, and as its risk-based procedures for ongoing due diligence require, rather than at every new account | | US Corporate Transparency Act, 31 CFR 1010.380 | Reporting to FinCEN of beneficial ownership information | **US-created entities permanently exempt** (interim rule 26 March 2025; final rule 14 August 2026). Only foreign entities registered to do business in a US State or Tribal jurisdiction report, and they do not report US-person owners | | EU Anti-Money Laundering Regulation (AMLR), Regulation (EU) 2024/1624, Articles 51–52 | Natural persons with an ownership interest (25% or more of shares, voting rights or other ownership interest) or control; after an assessment due by 10 July 2029, the Commission may set a lower threshold for higher-risk categories of corporate entities, at most 15% unless it concludes a higher one is more proportionate, and in any case below 25% | Applies from 10 July 2027 (from 10 July 2029 for football agents and professional football clubs) | | EU Anti-Money Laundering Directive (AMLD6), Directive (EU) 2024/1640 | Central registers of beneficial ownership for legal entities and legal arrangements, in machine-readable form | Transposition generally by 10 July 2027; the register-access provisions (Articles 11 to 13 and 15) by 10 July 2026; Article 74, which amends the existing directive so that beneficial ownership information is accessible to competent authorities, obliged entities and persons that can demonstrate a legitimate interest, by 10 July 2025 (Article 78(1)) | | UK register of people with significant control (Companies Act 2006, Part 21A) | More than 25% of shares or voting rights; right to appoint or remove a majority of the board; or significant influence or control | In force; holdings reported in bands: over 25% to 50%, over 50% to less than 75%, 75% or more. A person with a majority stake in a legal entity is treated as holding what that entity holds (Sch 1A paras 9 and 18) | ## A beneficial owner is always a natural person Under FATF, US and EU anti-money laundering (AML) rules the beneficial owner is an individual. A holding company, fund or trust can sit in the ownership chain but is never itself the ultimate beneficial owner; an entity may have several beneficial owners, or none above the ownership threshold, in which case the control test identifies who must be named. Diagrams that label an intermediate company the "ultimate beneficial owner" (UBO) are wrong. ## Tracing through structures Ownership is counted directly and indirectly. The common method multiplies percentages through each layer and adds direct and indirect stakes, as in the worked example; the EU AMLR prescribes this method, subject to exceptions (Article 52(1)). Some regimes instead attribute a holding in full through any entity a person controls. Under the UK rules for people with significant control, a person with a majority stake in a legal entity (a majority of its voting rights, held directly or under an agreement with other members; the right to appoint or remove a majority of its board; or the right to exercise, or actual exercise of, dominant influence or control) holds whatever that entity holds, through each entity in a chain of majority stakes (Companies Act 2006, Sch 1A paras 9 and 18). The same structure can therefore give different answers under different rules. Trusts, nominee arrangements and agreements to act together need separate analysis. Where ownership structures are complex, beneficial ownership tracing is a documented, evidence-led exercise rather than a calculation alone. ## Private funds A widely held fund usually has no investor at or above 25%, so its beneficial-ownership disclosure rests on control: the individuals who control the general partner or manager. Under the US CDD rule, a pooled investment vehicle operated or advised by a financial institution that the rule excludes from the definition of legal-entity customer is itself excluded (31 CFR 1010.230(e)(2)(xi)), and one operated or advised by a financial institution that is not excluded is subject only to the control prong (1010.230(e)(3)(i)). Funds-of-one and small funds may have investors above the threshold who must be identified. When a fund onboards investors, it applies the same tests to each legal-entity investor as part of [KYC and AML](https://altss.com/glossary/kyc-aml). ## Other meanings of "beneficial owner" - **Fund law:** section 3(c)(1) of the US Investment Company Act counts the persons who beneficially own the securities of a [3(c)(1) fund](https://altss.com/glossary/3-c-1-fund); this is an investor-count concept, not an AML one. - **Securities law:** under Exchange Act Rule 13d-3, a beneficial owner of a security is anyone who, directly or indirectly, has or shares voting power or investment power over it, including securities the person can acquire within 60 days; this test applies to large-holder reporting under Exchange Act sections 13(d) and 13(g). - **Corporate-data identifiers:** LEI Level 2 data record direct and ultimate accounting parents (who owns whom among legal entities), not the natural persons behind them. Each sense has its own test. Mixing them, for example treating an LEI ultimate parent as the AML beneficial owner, produces wrong answers. ## Legal definition and market usage "UBO" is market shorthand for the AML beneficial owner. Registers differ in coverage, thresholds and public access. In the EU, the Court of Justice (Grand Chamber) held on 22 November 2022, in Joined Cases C-37/20 and C-601/20, that the 2018 amendment to the anti-money-laundering directive requiring beneficial ownership information on companies to be accessible in all cases to any member of the general public was invalid, having regard to the rights to respect for private life and to protection of personal data in Articles 7 and 8 of the Charter. The Open Ownership principles set out what effective disclosure regimes include: a clear definition, broad coverage, adequate detail, central registers, access, structured data, verification, up-to-date and historical records, and enforcement. A register entry is a filing by the company or its officers, so it records what was declared. ## Worked example ### Illustrative ownership tracing under a 25% ownership test Target, a limited liability company (LLC), is owned 50% by HoldCo and 50% by other investors, none above 20%; one of them is Person B, with 10%. HoldCo is owned 60% by Person A and 40% by Person B. The CEO, Person C, owns nothing. Indirect holdings multiply through each layer: A holds 60% × 50% = **30%**; B holds 40% × 50% = 20% indirectly plus 10% directly = **30%**. Both meet a 25%-or-more ownership test. Under the US CDD rule the legal-entity customer must also name one individual with significant control, here Person C. The calculation is illustrative; regimes differ in how they trace indirect holdings. Examples are illustrative; figures are not market data. ## Not the same as - [Legal Entity Hierarchy](https://altss.com/glossary/legal-entity-hierarchy): A legal-entity hierarchy maps entity-to-entity ownership; beneficial ownership asks which natural persons sit at the end of it. - Legal Entity Identifier: LEI parent data identify accounting parents among legal entities, not individuals. ## Common mistakes - Naming an entity as the ultimate beneficial owner. - Saying all US LLCs must file beneficial ownership reports. US-created entities have been exempt since March 2025. - Treating 25% as a universal threshold. The EU AMLR lets the Commission set a lower threshold for higher-risk categories of corporate entities, the UK uses more than 25%, and control tests apply regardless of ownership. - Using an LEI's ultimate parent as the AML beneficial owner. - Confusing the AML meaning with the securities-law meaning based on voting or investment power. ## Edge cases - Where no individual meets the ownership threshold, the control prong still requires someone to be identified. - Bearer shares, nominee shareholders and trusts can hide ownership; registers and due diligence rules address them separately. ## Questions ### Can a company be an ultimate beneficial owner? No. Under FATF, US and EU AML rules the beneficial owner is always a natural person. Companies and trusts can appear in the ownership chain, but the analysis continues until it reaches individuals or applies the control test. ### Do US companies still have to file beneficial ownership reports with FinCEN? No. Since the interim final rule of 26 March 2025, confirmed by the final rule effective 14 August 2026, US-created entities are exempt. Only foreign entities registered to do business in a US State or Tribal jurisdiction must report. ## Sources - [International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation (The FATF Recommendations)](https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatf-recommendations.html). Financial Action Task Force, FATF, Adopted February 2012; amended repeatedly (incl. February 2025 R.1/INR.1, 10, 15; June 2025 R.16). Status: In force (living document) (checked 2026-10-01). R.24, R.25 (living document) — supports: Beneficial ownership information on legal persons and arrangements (current edition; text read in SRC-INTL-FATF-REC-2025-02) - [31 CFR 1010.230 - Beneficial ownership requirements for legal entity customers (CDD Rule)](https://www.law.cornell.edu/cfr/text/31/1010.230). Financial Crimes Enforcement Network (CFR text via eCFR; LII mirror), eCFR current as of 2026-09-29; last amended 2017-09-28. Status: in force (with 2026 exceptive relief) (checked 2026-10-01). 31 CFR 1010.230(d)(1)-(2), (e)(2)(i)-(xiv), (e)(3)(i) — supports: US 25% ownership prong plus one control person; excluded legal-entity customers, incl. pooled vehicles operated or advised by excluded financial institutions; other pooled vehicles control prong only - [FinCEN Issues Exceptive Relief to Streamline Customer Due Diligence Requirements](https://www.fincen.gov/news/news-releases/fincen-issues-exceptive-relief-streamline-customer-due-diligence-requirements). Financial Crimes Enforcement Network, 2026-02-13. Status: in force (exceptive relief order; optional for institutions) (checked 2026-10-01). Exceptive relief, 2026-02-13 — supports: Identification at first account opening - [31 CFR 1010.380 - Reports of beneficial ownership information](https://www.law.cornell.edu/cfr/text/31/1010.380). Financial Crimes Enforcement Network (CFR text via eCFR; LII mirror), eCFR current as of 2026-09-29; last amended 2026-08-14 (amendatory text at 91 FR 52528 of the final rule beginning at 91 FR 52508). Status: amended (checked 2026-10-01). 31 CFR 1010.380 (as amended 2026-08-14) — supports: BOI reporting limited to foreign reporting companies; US-person owners not reported - [Beneficial Ownership Information Reporting Requirement Revision (final rule), 91 FR 52508](https://www.govinfo.gov/content/pkg/FR-2026-08-14/pdf/2026-16576.pdf). Financial Crimes Enforcement Network (Federal Register via govinfo), Published and effective 2026-08-14. Status: in force (checked 2026-10-01). 91 FR 52508 (2026-08-14) — supports: Final rule continuing the exemptions - [Beneficial Ownership Information Reporting](https://www.fincen.gov/boi). Financial Crimes Enforcement Network, Reflects final rule announced 2026-08-11. Status: current (checked 2026-10-01). BOI reporting page — supports: US companies exempt; only foreign reporting companies report - [31 U.S.C. 5336 - Beneficial ownership information reporting requirements (Corporate Transparency Act)](https://www.law.cornell.edu/uscode/text/31/5336). U.S. Congress (United States Code; LII mirror), Current US Code text as published by LII (accessed 2026-10-01). Status: in force (statute); reporting narrowed by FinCEN rule (checked 2026-10-01). 31 U.S.C. 5336 — supports: Statutory basis of BOI reporting; scope narrowed by rule - [Regulation (EU) 2024/1624 on the prevention of the use of the financial system for money laundering or terrorist financing (AMLR)](https://eur-lex.europa.eu/eli/reg/2024/1624/oj/eng). European Parliament and Council, Official Journal of the EU, L series, 19.6.2024, Adopted 31 May 2024; applies from 10 July 2027 (10 July 2029 for certain football agents/clubs). Status: In force, not yet applicable (checked 2026-10-01). Arts. 51, 52(1)-(2), 90 — supports: Natural persons; 25%-or-more ownership; multiplication method; lower threshold for higher-risk categories (max 15% unless higher justified, below 25%); applies from 10 July 2027 - [Directive (EU) 2024/1640 on mechanisms to prevent the use of the financial system for ML/TF (AMLD6)](https://eur-lex.europa.eu/eli/dir/2024/1640/oj/eng). European Parliament and Council, Official Journal of the EU, L series, 19.6.2024, Adopted 31 May 2024; transposition generally by 10 July 2027. Status: In force; transposition pending (checked 2026-10-01). Arts. 10(1), 78(1) — supports: Central beneficial ownership registers in machine-readable format; transposition by 10 July 2027, Arts. 11-13 and 15 by 10 July 2026 - [Summary guidance for companies: register of people with significant control (PSCs)](https://www.gov.uk/government/publications/people-with-significant-control-summary-guidance/summary-guidance-for-companies-register-of-people-with-significant-control-pscs). Department for Business and Trade / Companies House, GOV.UK, Web guidance (Companies Act 2006 Part 21A regime, in force since 2016); accessed 2026-10-01. Status: Current (checked 2026-10-01). PSC summary guidance — supports: More than 25% shares or votes, board appointment right, significant influence or control; reporting bands - [Introducing the Legal Entity Identifier (LEI)](https://www.gleif.org/en/about-lei/introducing-the-legal-entity-identifier-lei). GLEIF, Global Legal Entity Identifier Foundation, ISO 17442 identifier; web page accessed 2026-10-01. Status: Current (checked 2026-10-01). Level 1 and Level 2 data — supports: LEI Level 2 records direct and ultimate parents (who owns whom) - [Open Ownership Principles for effective beneficial ownership disclosure](https://www.openownership.org/en/principles/). Open Ownership, First published December 2020; current version January 2023. Status: Current (checked 2026-10-01). Principles (January 2023 version) — supports: Nine principles for effective beneficial ownership disclosure - [15 U.S.C. 80a-3 - Definition of investment company (Investment Company Act sec. 3, incl. 3(c)(1) and 3(c)(7))](https://www.law.cornell.edu/uscode/text/15/80a-3). U.S. Congress (United States Code; LII mirror), Current US Code text as published by LII (accessed 2026-10-01). Status: in force (checked 2026-10-01). 15 U.S.C. 80a-3(c)(1) — supports: Investor-count sense of beneficial ownership in fund law - [Companies Act 2006, Schedule 1A (people with significant control): paragraphs 9 and 18](https://www.legislation.gov.uk/ukpga/2006/46/schedule/1A/paragraph/18). UK Parliament (legislation.gov.uk), Revised text (accessed 2026-10-01). Status: in force (checked 2026-10-01). Sch 1A paras 2-5, 9, 18 — supports: PSC conditions; majority-stake attribution through chains - [17 CFR 240.13d-3 - Determination of beneficial owner](https://www.law.cornell.edu/cfr/text/17/240.13d-3). U.S. Securities and Exchange Commission (CFR text via LII), Current CFR text as published by LII (accessed 2026-10-01); source line 43 FR 18495 (1978), as amended through 88 FR 76983, Nov. 7, 2023. Status: in force (checked 2026-10-01). 17 CFR 240.13d-3(a), (d)(1)(i) — supports: Securities-law beneficial ownership test for sections 13(d) and 13(g) - [CJEU Press Release No 188/22: Judgment in Joined Cases C-37/20 Luxembourg Business Registers and C-601/20 Sovim](https://curia.europa.eu/jcms/upload/docs/application/pdf/2022-11/cp220188en.pdf). Court of Justice of the European Union, Judgment of 22 November 2022 (Grand Chamber). Status: decided (checked 2026-10-01). Press release 188/22 — supports: CJEU invalidation of unrestricted public access to beneficial ownership registers - [International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation - The FATF Recommendations (updated February 2025)](https://www.fatf-gafi.org/content/dam/fatf-gafi/recommendations/Feburary%202025%20FATF%20Recommendations.pdf). Financial Action Task Force (FATF), Edition updated February 2025. Status: superseded edition of a living standard (checked 2026-10-02). R.24; R.25; amendments table (R.24 March 2022, R.25 February 2023); Glossary fn 85 — supports: Natural persons; adequate, accurate and up-to-date information; revision dates; ultimate beneficial owner always a natural person - [Customer Due Diligence Rule - Consolidated Frequently Asked Questions (updated May 6, 2026)](https://www.fincen.gov/system/files/2026-05/CDD-Rule-Consolidated-FAQs.pdf). Financial Crimes Enforcement Network, Re-issued 2026-05-06 to align with exceptive relief order FIN-2026-R001 of 2026-02-13. Status: current (checked 2026-10-02). FAQ B.21 (updated 2026-05-06) — supports: No look-through of pooled vehicles whose adviser is not excluded; control prong applies (T2) - [Judgment of the Court (Grand Chamber) of 22 November 2022, Joined Cases C-37/20 and C-601/20, Luxembourg Business Registers (ECLI:EU:C:2022:912)](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62020CJ0037). Court of Justice of the European Union (text via Publications Office, CELEX 62020CJ0037), 2022-11-22. Status: decided (checked 2026-10-02). Joined Cases C-37/20 and C-601/20, operative part — supports: Invalidity of unrestricted public access to company beneficial ownership information ## Related terms 5 terms - [Legal Entity Hierarchy](https://altss.com/glossary/legal-entity-hierarchy) - [3(c)(1) Fund](https://altss.com/glossary/3-c-1-fund) - [Entity Resolution](https://altss.com/glossary/entity-resolution) - [Open-Source Intelligence (OSINT)](https://altss.com/glossary/osint) - [KYC and AML](https://altss.com/glossary/kyc-aml) ## Concept record Concept ID ALTSS-REG-044 Classification Legal, regulatory & tax · Evidence & data Topics Legal, regulatory & tax · Private markets data & OSINT Jurisdiction US; EU; UK; INTL Version 2.0.0 Last reviewed 2026-10-02 Structured data [JSON](https://altss.com/reference/concepts/beneficial-ownership.json) Source check Legal and regulatory statements checked against the cited primary sources on 2026-10-02 ([how](https://altss.com/methodology)). General information, not advice. ## Canonical URL https://altss.com/glossary/beneficial-ownership