When your customer is a company, "the customer" is not a person you can screen. Someone real owns or controls it, and that is who a money launderer will try to hide behind layers of holding companies and trusts. Identifying the UBO strips those layers away so you know who actually benefits.
The 25 percent rule, and its limit
A natural person who owns or controls 25 percent or more of an entity is generally treated as a beneficial owner. Control can also exist without hitting that percentage, for example through voting rights, board appointment powers or a controlling agreement, so the threshold is where you start, not the whole test.
| When | What happens |
|---|---|
| Customer company | the entity you onboard owned 100% by |
| Holding company | an intermediate layer 60% 40% |
| Individual (UBO) | 60% > 25% threshold |
| Other owners | below threshold |
Tracing a UBO: the customer company is 100 percent owned by a holding company, which is 60 percent owned by an individual and 40 percent by others. The 60 percent individual exceeds the 25 percent threshold and is the ultimate beneficial owner.
Tracing ownership through a holding company to the natural person who exceeds the 25 percent threshold. That person is the ultimate beneficial owner and must be screened.
Why it matters
Once you have identified the UBO, you screen them against sanctions, PEP and adverse-media data exactly as you would an individual customer. Skipping this step is one of the most common ways a screened-clean company still hides a sanctioned or high-risk person.
Know Your Business (KYB) Politically exposed person Full AML glossary
How MemberCheck handles this
MemberCheck's KYB verifies corporate customers and their beneficial owners in the same workflow as individual screening, so the people behind an entity are identified and screened without leaving the platform.