How KYC Tools are Streamlining the UBO Identification Process

For compliance teams, identifying ultimate beneficial owners (UBOs) remains one of the most challenging aspects of customer due diligence (CDD). UBOs, the individuals who ultimately own or control a legal entity, must be uncovered to prevent financial crime and comply with AML/CTF regulations. However, complex corporate structures, evolving regulations, and reliance on manual workflows, often turn UBO identification into a tedious resource-intensive task.  

This article explains why UBO identification is a major challenge, how regulatory expectations are shifting and how smarter KYC technology, such as KYC360 can streamline this process.  

Why has UBO Identification Become a Challenge for Firms?  

• Multi-layered ownership structures across jurisdictions  
• Use of nominee shareholders, trusts and shell companies to obscure control 
• Manual processes and outdated data that increase the risk of human error  

When ownership is not properly understood, firms risk onboarding individuals who are sanctioned, politically exposed or linked to financial crime. Failing to comply with UBO reporting requirements can enable tax evasion, terrorist financing or money laundering, and lead to enforcement actions and reputational harm. 

Meeting Evolving Regulatory Expectations 

In 2022, the Financial Action Task Force (FATF) updated its guidance on Recommendation 24 (legal persons) and Recommendation 25 (legal arrangements) in 2023 and 2024, emphasising that jurisdictions must ensure “adequate, accurate and up-to-date” UBO information is maintained and accessible.  

In the EU, successive AML Directives mandate beneficial ownership registers. However, a 2022 court ruling restricted public access to those registers, creating visibility gaps across some jurisdictions. The implementation of registers has also been mixed.  

In the United States, the Corporate Transparency Act (CTA) took effect in 2024 and initially mandated entities to submit beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). However, in March 2025, the U.S. Department of the Treasury announced it will not enforce penalties against U.S.‐formed companies. 

To meet AML/CTF regulations, firms must ensure they verify, monitor and evidence how they assess who truly controls a customer. 

How to Effectively Identify a UBO

Below is a general guide on how to effectively identify a UBO. Specific steps may vary depending on your KYC/KYB processes.  

• Collect entity information  
• Map out the ownership structure  
• Identify the natural person behind the entity (typically whoever holds controlling ownership interest or influence)  
• Verify UBO information with public databases, Government-issued ID, and documents that provide evidence of ownership  
• Screen the UBO against sanctions lists, PEP databases and adverse media databases  
• Assess and document the risk level 
• Depending on risk, enhanced due diligence (EDD) may be required 
• Continue to monitor for any changes  

How Technology can Streamline UBO Identification 

The volume of work required for the checks and research involved in identifying UBOs makes it an inefficient process if done manually. Technology solutions such as KYC360 can play a critical role in streamlining UBO identification when onboarding complex client structures.  

Automated onboarding software can aggregate ownership data from multiple jurisdictions, visualise ownership trees, and apply analytics to detect hidden or indirect ownership links. For example, a modern KYC tool may pull registry data and third-party corporate data in seconds, highlight when someone crosses an ownership threshold, and instantly screen identified individuals against sanction and PEP lists. Centralised workflow systems provide audit trails and task routing.  

The KYC360 platform enables faster, more accurate onboarding of complex entities by automating ownership discovery, visualising complex structures and applying configurable risk scoring in one workflow. Dynamic forms integrated world-class KYB data sources and ongoing monitoring help compliance teams verify UBOs more efficiently and reduce manual touchpoints. This modern approach accelerates onboarding, reduces errors and frees compliance teams to focus on higher-value tasks.  

Best Practices for Stronger UBO Identification 

✔️ Use a risk-based approach  
Tailor the depth of investigation based on risk profile of the entity. For high-risk customers (complex offshore structures, high turnover, high-risk jurisdictions) enhance the threshold and verification steps.  

✔️ Use a variety of reliable data sources  
Do not rely solely on customer-provided ownership information. Cross-check with registries, commercial databases, public records and other independent sources.  

✔️ Ensure clear internal procedures and training 
Define policies that set ownership thresholds, control criteria, and escalation protocols. Train teams to recognise red flags (e.g., nominee directors, circular ownership, frequent share transfers).  

✔️ Leverage technology solutions 
Deploy tools that automate document collection, verification and monitoring. Use ownership-mapping analytics and automatic screening to efficiently identify ownership links and detect red flags.  

✔️ Maintain ongoing monitoring and refresh records 
UBOs can change unintentionally or deliberately. Establish checks at trigger events (e.g., reorganisations, new shareholders) and conduct ongoing data refresh rather than treating identification as a one-off activity.  

✔️ Foster escalation culture and audit readiness 
Encourage staff to raise uncertain cases and ensure a clear escalation path exists. Keep detailed records of every UBO identification step as this will be essential for audits and regulatory scrutiny. 

Summary

Accurately identifying UBOs is essential to preventing financial crime and meeting AML/CTF obligations. While complex ownership structures and jurisdictional inconsistencies continue to make UBO transparency challenging, technology has transformed what was once a manual, error-prone task.  

With the right mix of people, process, and technology, UBO identification becomes a reliable, repeatable discipline rather than a compliance headache. 

Contact KYC360 today if you need more detailed guidance or assistance with identifying UBOs or read our comprehensive guide on UBOs.