The Importance of Ultimate Beneficial Ownership (UBO) Transparency

A UBO (Ultimate Beneficial Owner) is an individual who ultimately owns or has control over a company, trust, or other legal entity. While businesses and trusts may be registered in a corporate name, the UBO is the one who ultimately benefits from ownership or control. For instance, a company may have multiple levels of corporate ownership, but the UBO would be the individual who has influence or significant financial interest in the background. A UBO is typically defined as an individual who owns more than 25% of a legal entity.

UBO transparency is a crucial weapon against financial crime and money laundering. The criminals hide their criminal activities behind complex company structures, making it hard to follow the source of such operations in the absence of transparency. Through UBO transparency, one is able to establish who is behind the companies and therefore hold them accountable.

Malta occupies a special place in the global economy as a hub of financial services, gaming, and shipping business. In recent years, regulators and industry in Malta have increasingly emphasized UBO transparency to develop the country's compliance infrastructure and enhance its international reputation.

To combat criminality enabled by opaque UBO structures, Malta has taken several measures to impose EU and international standards. The Malta Business Registry (MBR) acts as the national central UBO register, keeping data available so the authorities and other financial institutions have access for purposes of due diligence. Additionally, Malta implements EU Anti-Money Laundering Directives calling for identifying and verifying the UBOs. Also, for the AML rules' adherence, Financial Intelligence Analysis Unit (FIAU) conducts such checks and provides for assuring the quality of UBOs' data up to date. The FIAU mandates companies to refresh their UBO data periodically and report suspicious transactions.

Malta being put on the FATF grey list in 2021 made its loopholes in the anti-financial crime regime, particularly in UBO transparency, apparent. The country was able to delist from the grey list in 2022, emphasizing the importance of transparency in re-establishing confidence and strengthening its regulatory reputation. UBO transparency sends a message to foreign investors that Malta is a compliant and secure business environment. It reflects the country's commitment to fairness and accountability—essential factors in attracting long-term investments. By adopting UBO transparency, Malta avoids allowing its companies to be used for criminal activities, thereby protecting the integrity of its corporate sector and strengthening international relations.

UBO transparency is not only a regulatory requirement for Malta but also a critical element in safeguarding the nation's economic integrity and elevating its status in the world economy. If Malta continues to enhance its UBO regime, it will be able to lead in regulation, gaining the trust and credibility of its corporate and financial sectors. To entrepreneurs in Malta, adopting UBO transparency is a matter of extending beyond compliance requirements; it is an integral commitment to the goal of a cleaner and more open global economy.

Malta's dedication to UBO transparency further establishes its image as a stable, transparent and competitive international business jurisdiction. It encourages cross-border cooperation by offering the authorities in different countries simpler ways of information sharing. It also encourages cross-border mergers and investments, as investors have faith that risks are reduced by transparent ownership arrangements. Transparency also encourages ethical business conduct, which allows for the creation of trust in Malta's business environment.

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Get in Touch:

Christina Meli

cmeli@quazar.mt / +356 2388 4600