Why Identifying UBOs Remains so Challenging Today

By Ian Henderson, CEO of Kyckr

KYC specialists are spending more time and resources to comply with each new wave of regulations. And yet, with the speed of regulations seemingly accelerating, the risk of non-compliance is at an all-time high.

With each new European Anti-Money Laundering Directive and equivalent piece of American legislation comes more compliance challenges. At their current pace, we’ve found that KYC specialists can spend as many as 8 hours identifying and verifying the UBOs for a single organization. From start to finish, UBO processes may add weeks—not mere hours or days—to a customer’s onboarding period.

So what’s to blame for the inefficiency?

Common Challenges to UBO Verification

The national UBO registries are few and far between. One-quarter of the way through 2020, the state of national UBO registries was described as “patchy”. Without these registries to rely on, KYC specialists must do their own digging. Hence the hours they spend outlining complex, sometimes veiled ownership frameworks that routinely span borders and hide behind information barriers.

Without effective national UBO registries, AML regulations lack a critical foundation. And yet, it’s the organizations that get fined for non-compliance. Our 2020 AML Bank Fines Report detailed 28 financial institutions levied over 2.6 billion pounds, or $3.2 billion, in fines last year. The financial consequences of insufficient AML processes are tangible, and they’re steep.

And so organizations continue to pay a hefty price, both in direct investment and employee hours to remain compliant with AML regulations. Despite such great investment, there’s no sign that compliance will get any easier.

AML Laws Are Changing. Here’s How You Can Keep Up

The EU’s AML Directives are approved at varying intervals and contain regulatory changes that must be implemented on fixed timelines, and may be altered at virtually any time. For KYC specialists and their employers, the ever-evolving regulatory climate creates an indefinite sense of uncertainty.

One thing does appear certain: with each new directive, compliance specialists will be required to do more Customer Due Diligence (CDD). This is the nature of fighting increasingly complex financial crime—as new threats emerge, lawmakers must respond. However, the continued alteration of regulations puts a significant burden on organizations and customers alike.

To help your organization keep compliant, we’ve identified actionable measures to improve your UBO-specific processes:

Actionable Tip #1: Implement tools that simplify UBO identification and verification. The ever-changing regulatory landscape means compliance will continue to tax your KYC specialists. Without tools to ease the compliance process, your organization will spend unsightly sums and potentially lose customers due to lengthy onboarding processes. Technologies have emerged to fundamentally improve the way that KYC specialists conduct UBO verification. Some of these technologies can:

  • Access up-to-date, accurate UBO and corporate registries
  • Present UBO-specific data in a visually digestible manner
  • Allow KYC specialists to home in on specific features of an organization’s ownership framework
  • Provide data about every ownership layer
  • Allow compliance specialist to view connections between shareholders and organizations, including any red flags

There are more regulations to come. Being able to automate UBO identification processes reliably can reduce stress on your KYC specialists, cut down onboarding times, and benefit your organization in other tangible ways.

Actionable Tip #2: Tap into data from reliable primary data sources, such as company registries. We’re seeing traditional data suppliers offer UBO data. However, there’s no accompanying guarantee that the data is up-to-date. Instead of trusting in unproven third parties, consider more reliable alternatives.

Company registries are among the most trustworthy sources of UBO data. Don’t stop there, though. Invest in technologies that continually monitor changes to registry information and perform recursive analysis of ownership layers. This will reduce your exposure to flawed data.

Actionable Tip #3: Monitor regulatory obligations in your territories. Regulatory obligations will heighten as time passes. History tells us that this is true, and compliance specialists agree. Specific industries and regions will come under greater scrutiny and different customers may come with unique reporting and compliance requirements. Understanding your compliance obligations is a precursor to being compliant. Your organization should embrace any tools that can help you monitor regulatory changes in your own region as well as in regions where your customers operate.

Actionable Tip #4:  Embed UBO verification tools into your existing digital KYC processes.  One question you should consider before investing in UBO verification tools: will this tool mesh with your existing digital KYC processes? Find tools that integrate seamlessly into your CLM systems and other onboarding infrastructure. This will maximize your budget while preventing avoidable headaches.


As an organization, you’re virtually on your own when it comes to avoiding compliance fines and reducing your onboarding times. Fortunately, automated solutions are emerging to ease your compliance burden. These solutions can reduce the time KYC specialists spend on identifying UBOS, while also reducing the total cost of UBO verification. While your employees will remain vital to achieving compliance, could now be the time to call in the reinforcements?

About the author: Mr Henderson was most recently the CEO of a leading UK-based private and commercial bank, and during his two-year tenure he drove the successful and profitable diversification of the banking business. He also covered the role of CEO at Shawbrook Bank, one of the first UK Challenger banks, where he delivered the bank’s first ever profit. Mr Henderson previously held the roles of Chief Operating Officer of Barclays Wealth Private Banking where he was responsible for risk management & control of Barclays’ core private banking business in the UK and parts of EMEA and Asia. He was CEO of RBS International from 2005 to 2010 and during his tenure, profitability doubled, and the division was named the best performing general banking division in the RBS Group. Mr Henderson spent a total of 17 years at Royal Bank of Scotland where he was responsible for business and marketing strategy for the Royal Bank of Scotland and NatWest brands, comprising 2,400 branches and 13 million customers.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.