What is a beneficial owner?

A beneficial owner, also referred to by the abbreviation UBO (Ultimate Beneficial Owner), is a natural person who directly or indirectly exercises control over the customer or meets another criterion specified in the AML Act. The key factor is actual control, not merely the person’s formal position within the entity’s structure.

In the case of certain legal persons, one of the basic criteria is holding more than 25% of shares or stock or controlling more than 25% of voting rights. However, these are not the only ways of identifying a beneficial owner. Control may also be indirect or arise from other rights enabling a person to exercise decisive influence over the activities of the entity.

Therefore, identifying the beneficial owner should not be limited to checking the largest shareholder or reading information from KRS or CRBR. It requires understanding the ownership and control structure down to the level of natural persons.

How is a beneficial owner identified?

Identifying the UBO should lead to an answer to the question: which natural person ultimately owns or controls the customer or otherwise meets the statutory criteria for a beneficial owner?

The analysis should not stop at the first level of the ownership structure. In simplified terms, it may look as follows:

ownership → voting rights → indirect control → other rights → natural person → documentation.

The analysis should first consider, among other things, shares or stock, voting rights, and other rights enabling a person to exert influence over the entity. If the customer is directly owned by another company, subsequent levels of the structure must be analysed.

For example:

natural person → holding company → subsidiary → customer

In such a situation, indirect control may be relevant. The fact that a natural person is not listed as a direct shareholder of the customer does not therefore exclude that person from being identified as the beneficial owner. Control arising from other rights or circumstances must also be taken into account. A person may not hold the largest shareholding but may possess rights enabling them to exercise decisive influence over the activities of the entity.

The beneficial owner is not always the largest shareholder. Ownership analysis is the starting point, but the ultimate objective is to identify the natural person exercising actual control.

Is a person holding more than 25% of shares always the UBO?

Holding more than 25% of shares or stock is one of the statutory criteria for identifying a beneficial owner in the case of relevant legal persons. The wording “more than 25%” is important. A person holding exactly 25% of the shares does not meet this particular shareholding criterion solely on that basis. However, that person may still be a beneficial owner on another basis, for example because of voting rights, indirect control, or other rights enabling them to exercise decisive influence.

For example, in a company four shareholders may each hold 25% of the shares.

Such a structure alone does not allow a UBO to be identified on the basis of the criterion of holding more than 25% of shares. It must still be checked whether any of the shareholders has additional rights or exercises control in another way. The opposite situation is also possible: a person holding less than 25% of the shares may be the beneficial owner if they meet other control criteria.

There may also be more than one beneficial owner. Therefore, the question:

“Who holds more than 25% of the shares?”

is not always sufficient.

The proper analysis should lead to an answer to the following question:

“Which natural persons meet the statutory ownership or control criteria in relation to the entity?”

Beneficial owner vs CRBR – what is the difference?

A beneficial owner and a person entered in the Central Register of Beneficial Owners (CRBR) are not the same concept. A beneficial owner is a person who meets the criteria resulting from the AML Act. CRBR, on the other hand, is a register containing information on beneficial owners reported by entities subject to the reporting obligation.

CRBR is therefore an important source of information, but for an obliged institution it cannot be the sole basis for identifying the beneficial owner. The institution should independently analyse the customer, its ownership and control structure, and take appropriate steps to identify and verify the UBO. If the information contained in CRBR is inconsistent with other information established during the analysis, the discrepancy requires further clarification.

Depending on the case, the following may be required, among other things:

• corporate documents;
• information on shareholders or stockholders;
• documents concerning subsequent ownership levels;
• information on voting rights or special rights;
• information obtained from the customer;
• information from other reliable sources.

Not every beneficial owner also has to be disclosed in the Polish CRBR. For example, in the case of a natural person conducting business activity, if there are no grounds indicating that they are controlled by another natural person, the Act assumes that the entrepreneur is also their own beneficial owner. This does not, however, mean that a sole proprietorship must be reported to CRBR.

CRBR is a source of data on reported beneficial owners. It does not replace an independent determination of the customer’s ownership and control structure.

When can a senior managing official be the UBO?

A person holding a senior management position should not be identified as the beneficial owner solely because no person holding more than 25% of the shares has been found. This criterion is a fallback mechanism. The earlier criteria for identifying natural persons exercising ownership or control must first be analysed, including, among other things:

• shares or stock;
• voting rights;
• indirect ownership and control;
• other rights enabling the exercise of decisive influence.

Only in the case of a documented inability to identify, or doubts as to the identity of, natural persons meeting the earlier criteria, and provided there is no suspicion of money laundering or terrorist financing, does the Act allow for the identification of a natural person holding a senior management position.

The following rule therefore does not apply:

“no one holds more than 25% → the UBO is the CEO”.

The absence of a shareholder exceeding the 25% threshold merely means that other control mechanisms must be analysed. At the same time, a member of senior management may be a beneficial owner independently of this fallback mechanism if they themselves meet the earlier criteria for actual control.

Why is identifying the beneficial owner important in AML?

Identifying the UBO is one of the fundamental elements of understanding a business customer as part of KYB. It makes it possible to answer not only who formally appears in documents or registers, but above all who ultimately owns or controls the customer.

This is important for:

• understanding the customer’s ownership and control structure;
• identifying the persons behind the entity;
• conducting screening properly;
• assessing the risk of the relationship;
• detecting inconsistencies between sources of information;
• properly documenting AML/CFT findings and decisions.

KRS may show shareholders, members of governing bodies, or rules of representation. CRBR contains information on reported beneficial owners. The purpose of UBO analysis, however, is to establish what the customer’s ownership and control structure actually looks like and which natural persons are at the end of that structure. Merely identifying the name of the beneficial owner does not complete the process.

Customer due diligence measures also include identifying the UBO and taking reasonable measures to verify their identity. In the case of a customer that is a legal person, an organisational unit without legal personality, or a trust, they also include measures aimed at establishing the ownership and control structure. The scope of the analysis may vary depending on the complexity of the customer.

A simple structure:

natural person → company

will require a different approach than a structure such as:

natural person → foreign holding company → intermediary company → customer.

The more complex the structure, the more important it is to be able to demonstrate how the beneficial owner was identified and what information the assessment was based on.