As part of due diligence, screening of the Ultimate Beneficial Owner (UBO) is extremely imperative to have confidence in who your organization will actually do business with. Ignoring UBO can give rise to reputational damage, conflict of interest, and financial risks for your organization.

Who is the beneficial owner?

The Organisation for Economic Co-operation and Development (OECD) divides owners and actual beneficiaries into three types: (1) in a company, beneficial owner (BO) is a shareholder or member; (2) in a partnership, BO is a partner, both limited and general in nature; (3) in a trust or foundation, BO is the founder.

In Indonesia, the definition of BO can be referred to Presidential Decree No. 13/2018. The decree states that an individual is said to be a BO if he / she has income and / or profits as a result of ownership of more than 25% of shares, capital, initial wealth, funding sources, or other rights that can give rise to profits from the corporation.

In addition, even though an individual does not have wealth in the corporation, he/she can also be categorized as a beneficial owner if he/she has unlimited authority regarding the appointment of corporate management and control of the corporation without having to obtain approval from the authority of any party, or is the real owner of the funds over the ownership of the corporation.

Why is UBO screening required?

For organizations that want to have a business cooperation with other entities, UBO screening will help them identify who actually controls the entity and the potential risks associated with it.

Among the benefits of a UBO screening include determining whether a beneficial owner of the company is not listed in the company structure, or is actually a politician and/or a member of the House of Representatives.

The result of this screening will allow your organization to identify previously unexposed risks, such as conflict of interest and potential damage to reputation among other several risk factors. In addition, disclosing the beneficial owner will make the company’s overall due diligence process easier.

At Integrity Asia, our team is competent, experienced and equipped in conducting UBO screening as part of our due diligence service. Our team assists clients from various industries to conduct UBO screening and is available to help your business to handle due diligence on your prospective business partner or third party.

Also Read:

ARANEA: How Technology Enhances The Background Screening and Due Diligence

Anti-Bribery Due Diligence in Mergers and Acquisitions

Vendor Due Diligence: 3 Common Pitfalls Your Companies Must Avoid

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