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The concept of the Ultimate Beneficial Owner (UBO), referring to the individuals who ultimately benefit from a legal entity, has become a crucial part of the client Know Your Customer (KYC) onboarding and remediation procedures. This is primarily due to its importance in the recent wave of international Anti-Money Laundering/Counter-Terrorist Financing (AML/CTF) regulations and tax compliance standards, including the Securities and Exchange Commission of Pakistan (SECP), Foreign Account Tax Compliance Act (FATCA), and Common Reporting Standard (CRS).

As mandated by the Financial Action Task Force (FATF) standards, all corporate registries and financial institutions, including banks, are required to collect UBO information from legal entities and arrangements. This critical measure is taken to deter serious offenses such as money laundering and financing of terrorism.

The absence of transparency around UBOs enables illicit activities like money laundering via Companies, Limited Liability Partnerships (LLPs), and Trusts. Consequently, all pertinent parties, including Banks, Financial Institutions (FIs), Company Secretaries, and Law Enforcement Agencies (LEAs) should prioritize the identification of UBOs in their efforts to combat money laundering and terrorist financing.