Identification of ultimate beneficial owners (UBOs) sits at the heart of the Financial Action Task Force’s (FATF) strategy to prevent the misuse of companies and other legal structures for money laundering, terrorist financing, and related crimes. Recent revisions to FATF Recommendations 24 and 25 have significantly raised the global bar, pushing countries and private‑sector entities toward a more systematic, risk‑based, and data‑driven approach to uncovering the real people behind legal persons and legal arrangements.ripjar+2
FATF’s concept of a UBO
FATF defines a beneficial owner as the natural person or persons who ultimately own or control a customer and/or on whose behalf a transaction is conducted, including those who exercise ultimate effective control over a legal person or arrangement. This focus on “ultimate” control is designed to look through complex chains of ownership, nominee arrangements, or trusts that can otherwise obscure who really benefits from or directs the use of assets.namescan+2
While FATF does not prescribe a single ownership threshold, it recognises that jurisdictions commonly use quantitative criteria, such as shareholding or voting rights, alongside qualitative indicators like the power to appoint management or exercise significant influence. The key expectation is that domestic rules and institutional practices reliably capture those individuals who can meaningfully control a legal person or arrangement, regardless of how that control is structured.rapidlei+3
Why FATF prioritises UBO identification
FATF’s emphasis on UBOs stems from extensive evidence that anonymous or opaque legal entities are central tools for hiding corrupt proceeds, tax evasion, sanctions evasion, and organised crime profits. Shell and front companies can move funds across borders, open bank accounts, or hold high‑value assets while concealing the involvement of politically exposed persons (PEPs), criminal groups, or designated terrorist organisations.membercheck+2
By compelling countries and obliged entities to identify and verify UBOs, FATF aims to give competent authorities a clearer map of financial relationships and to reduce the availability of corporate “getaway vehicles” for illicit finance. This, in turn, strengthens the integrity of the global financial system and supports complementary policy goals, including tax transparency and anti‑corruption initiatives.oecd+3
Recommendation 24: legal persons
FATF Recommendation 24 is the cornerstone standard for beneficial ownership transparency of legal persons such as companies, foundations, and certain types of partnerships. It requires countries to ensure that competent authorities can obtain adequate, accurate, and up‑to‑date information on the beneficial owners of these entities in a timely manner.tookitaki+2
The revised Recommendation 24 pushes jurisdictions toward a “multi‑pronged” model that combines several sources of beneficial ownership data, including company registries, information held by reporting entities as part of customer due diligence, and other official or reliable databases. It also calls for stronger controls over bearer shares, nominee shareholders and directors, and foreign‑created entities with sufficient links to the jurisdiction, all of which can otherwise frustrate UBO identification.ripjar+2
Recommendation 25: legal arrangements
Complementing Recommendation 24, Recommendation 25 addresses beneficial ownership and transparency of legal arrangements, most notably express trusts and similar structures. FATF recognises that these arrangements can serve legitimate purposes but are also vulnerable to abuse because they separate legal and beneficial ownership and can be structured across multiple jurisdictions.regulationtomorrow+3
Under Recommendation 25 and its guidance, trustees and equivalent parties are expected to obtain, maintain, and provide accurate beneficial ownership information about the parties to the arrangement, including settlors, trustees, protectors (where applicable), beneficiaries, and any other person exercising ultimate control. Countries must also put in place mechanisms that ensure competent authorities can rapidly access this information, backed by effective, proportionate, and dissuasive sanctions for non‑compliance.fiaumalta+2
The multi‑pronged, risk‑based approach
A central theme of FATF’s updated guidance is the requirement for a multi‑pronged approach to beneficial ownership information, shaped by a risk‑based methodology. Rather than depending on a single data source, countries are urged to design systems in which registries, regulated entities, supervisors, and other authorities each capture and share pieces of the beneficial ownership puzzle.namescan+2
Risk‑based implementation means that higher‑risk sectors, structures, and customers should trigger more intensive measures to identify and verify UBOs, such as enhanced due diligence, deeper ownership mapping, or cross‑border information requests. By contrast, lower‑risk scenarios can be addressed with proportionate, less burdensome checks, allowing both public and private actors to allocate resources where they have the greatest impact on preventing misuse.pwc+3
Practical implications for obliged entities
From FATF’s perspective, financial institutions and designated non‑financial businesses and professions (DNFBPs) are on the front line of UBO identification through customer due diligence and ongoing monitoring. They are expected to understand ownership and control structures, look through layers of entities, and verify the identity of beneficial owners using reliable, independent sources, including registries where available.oecd+2
Obliged entities must also recognise red flags that may indicate efforts to conceal UBOs, such as unnecessarily complex corporate chains, use of high‑risk jurisdictions, nominee roles, or unexplained changes in ownership. FATF’s mutual evaluation process increasingly tests not only whether rules exist on paper, but whether firms and authorities can effectively apply them to identify real beneficial owners and take appropriate risk‑mitigating action.complyadvant
Financial Action Task Force. “Guidance on Beneficial Ownership and Transparency of Legal Arrangements (Recommendation 25).” Key elements discussed in FATF releases and secondary analyses, including Regulation Tomorrow, “FATF Guidance for a Risk-Based Approach for Beneficial Ownership and Transparency of Legal Arrangements,” May 2, 2024, and FIAU Malta, “Beneficial Ownership and Transparency of Legal Arrangements,” March 2024, .regulationtomorrow+1
Financial Action Task Force. “Preventing Misuse of Legal Persons and Arrangements.” Selected themes summarised in NameScan, “Enhancing Transparency of Legal Persons: FATF Report on Beneficial Ownership,” July 12, 2023, and MemberCheck, “Preventing Misuse of Legal Persons,” September 5, 2023, a.membercheck+1
Open Ownership. “FATF Recommendation 24: Global Standards on Beneficial Ownership Are Rising.” April 24, 2021, .openownership
RapidLEI. “FATF and ‘Beneficial Ownership’: How LEIs Help.” August 6, 2025.rapidlei
Ripjar. “Ultimate Beneficial Ownership: Key Challenges and New FATF UBO Guidance.” January 30, 2025, acripjar
UN/OECD Global Forum. “Building Effective Beneficial Ownership Frameworks: A Toolkit for Policy Makers.” Selected sections on FATF standards and effective frameworks, .oecd+1
Aspida Group. “FATF Publishes New Guidance Document on Beneficial Ownership and Transparency of Legal Arrangements.” .aspidagroup
PwC. “FATF Guidance: Risk-Based Approach on Beneficial Ownership and Transparency of Legal Arrangements.” May 16, 2024,.pwc
ComplyAdvantage. “FATF Plenary February 2023: Key Takeaways and Initiatives.” February 11, 2025, .complyadvantage
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