Running a business anywhere takes a lot of work and can pose tons of risks.
The number of scammers, money launderers, and other criminal activities is rising worldwide.
For these reasons, it’s vital that the ultimate beneficial owner (UBO) is determined through a series of checks.
Proving who the beneficial owner of a company is important in knowing who you are really doing business with.
Many countries have different standards, so it is important to do your research for the country you wish to do business.
What is a beneficial owner?
A beneficial owner (BO) is described as a person who owns or controls at least 25% of the income and property rights from the place the income is provided — the majority shareholder.
The Chinese believe investors with higher quality information about ownership can make better investment decisions since they know more about the company — proving they are the beneficial owner.
Tax treaties can be had for any foreign business owner after they have been in business for 12 months and proven that they are the beneficial owner.
The BO must be fully known and identified, publicly. Look online to determine the beneficial owner, in the updated databases.
What is a UBO?
The ultimate beneficial owner is defined as the person who ultimately owns and controls the business — this person usually is a 50-100% shareholder.
Essentially, the UBO is the main owner of a company.
The UBO is not always publicly known in China. Though this is improving thanks to updated databases of UBOs in China.
Why is knowing the beneficial owner important?
Knowing who the beneficial owner and ultimate beneficial owner is can be a crucial step in stopping criminal activity.
Most scammers, money launderers, and others involved in criminal activities will hide their identity, so they can get away with what they wish to accomplish.
Money laundering, scams, and tax evasion can wreak havoc on a business, financial institution, and the entire economy if left unnoticed.
A business or individual that does business with these kinds of people can also face a bad reputation.
As part of the global efforts to stop unwanted activities, China has been improving its procedures in identifying the BO and UBO for each company.
The world, as a whole, needs to have standards in place to determine the UBO and the BO of companies in order to have a chance at ending the financial criminal activities that can cause damage to the economy.
With the amount of fraudulent activity, it is vital to determine the ultimate beneficial owner of a company, to ensure that you are dealing with a real business.
The world is increasingly being filled with scammers, money launderers, and a number of other ways to defraud the financial system.
There are disclosure rules in China to prevent money laundering, tax evasion, and corruption.
If you are running a business or dealing with a financial institute, it’s important to have open communication and know who you are dealing with.