The UBO Ownership Threshold Rule: 25%, 50%, and How to Trace Indirect Control

Ultimate Beneficial Owner (UBO) rules are designed to identify the natural persons who ultimately own or control a company, regardless of how many corporate layers separate them from the legal entity. The standard threshold for triggering UBO identification is 25% ownership or voting rights, as established by international guidelines like FATF, EU AMLD, and the FinCEN CDD Rule. However, the challenge arises in identifying UBOs through layered ownership structures, where indirect stakes can obscure true ownership. To address this, the 50% indirect-ownership rule traces proportional stakes through all layers, ensuring that individuals with significant control are identified. Compliance involves not only identifying but also verifying UBOs through processes similar to Know Your Customer (KYC) checks, including document verification and screening against sanctions lists. Solutions like Didit's Business Verification module streamline this process by integrating registry lookups, UBO extraction, and associated KYC sessions into a single workflow, which is crucial for sectors like finance, crypto, and corporate banking to meet compliance requirements effectively.