Beneficial Owner (UBO): Who It Is, How to Establish One, and Why It Matters

A company’s beneficial owner is often looked for in the wrong place: the Unified State Register of Legal Entities (EGRUL) shows the first tier of participants, but that isn’t always enough to establish the natural person who ultimately owns or controls the company. Sometimes that person isn’t named in any of the company’s documents at all — which is exactly why a bank sends a questionnaire asking who ultimately stands behind the organization.

The concept gets redefined differently in different contexts: in a contract, in litigation, in sanctions news, it surfaces with a different meaning each time. Exactly who counts as a beneficial owner is defined by one specific federal law — and its wording is more precise and narrower than most retellings.

Under 115-FZ, a beneficial owner is a natural person who ultimately, directly or indirectly, owns more than 25% of a company’s capital, or has the ability to control its actions.

Who a Beneficial Owner Is: The Definition Under 115-FZ

The precise definition comes from Article 3 of Federal Law No. 115-FZ of 7 August 2001 “On Combating the Legalization (Laundering) of Proceeds from Crime and the Financing of Terrorism”: “For the purposes of this Federal Law, a beneficial owner is a natural person who ultimately, directly or indirectly (through third parties), owns (has a predominant participating interest of more than 25 percent in the capital) of a client that is a legal entity, or has the ability to control the client’s actions. The beneficial owner of a client that is a natural person is deemed to be that person, except where there are grounds to believe that another natural person is the beneficial owner.” The definition is given per Federal Law No. 115-FZ of 7 August 2001, as amended by Federal Law No. 283-FZ of 4 August 2026; those amendments took effect on 1 September 2026. The paragraph containing the beneficial-owner definition itself is in the wording of Federal Law No. 210-FZ of 29 June 2015 and hasn’t changed since: the 2026 law affected only the provisions on digital currencies and foreign digital instruments within Article 3. For more on financial monitoring and 115-FZ in general, see the article “AML/CFT in Simple Terms.”

Two Criteria: Owning More Than 25% and the Ability to Control

The wording contains two independent criteria joined by “or”: ownership (direct or indirect, through third parties, a predominant participating interest of more than 25% in the capital) or control (the ability to control the client’s actions, with no ownership-interest requirement at all). The criteria are alternatives — either one is enough on its own; they aren’t added together. And the wording matters: the law says “more than 25 percent,” not “from 25%” and not “25% or more” — exactly 25% doesn’t meet the ownership criterion.

Why Only a Natural Person Can Be a Beneficial Owner

Only a natural person can be a beneficial owner. A legal entity — a holding company in the ownership chain, for example — isn’t a beneficial owner: it’s an intermediate link, not the answer to the question “who ultimately owns the company.” The words “ultimately” are exactly about this: you need to trace the chain not to the first legal entity in it, but to an actual person.

A similar but separate definition appears in Article 6.1(8) — it concerns a company’s own obligation to know about itself, not a bank’s obligation to vet a customer: these are different provisions addressed to different parties.

Ultimate Beneficiary, UBO, Beneficiary: What’s Not What

Around this term are several parallel labels and adjacent roles that are constantly confused.

The English abbreviation UBO (Ultimate Beneficial Owner) is generally used as the international equivalent of “beneficial owner,” but the specific criteria depend on the jurisdiction’s legislation and don’t fully match the criteria under 115-FZ (more on this in the section on FATF standards).

Beneficial Owner and Beneficiary Are Different Roles

This is the most common point of confusion on the topic. Article 3 of the same law gives the beneficiary a separate definition: “A beneficiary is a person to whose benefit the client acts, including on the basis of an agency agreement, a mandate agreement, a commission agreement, or a trust management agreement, when carrying out transactions involving funds or other property.” A beneficial owner is tied to the client and is defined through ownership or control; a beneficiary is tied to a transaction and is defined through the benefit derived from it. The law distinguishes four independent roles: the client, the client’s representative, the beneficiary, and the beneficial owner.

Founder, Participant, Director: Why the Roles Don’t Match

A founder may have exited the ranks of participants long ago — a former founder doesn’t automatically become a beneficial owner. A participant with a 20% interest doesn’t meet the ownership criterion (the threshold is more than 25%), and a shareholder can also be a legal entity. A director — more precisely, the sole executive body — doesn’t on its own constitute the criterion: the law allows recognizing this person as the beneficial owner, but only if no beneficial owner is otherwise identified, and only “may be recognized,” not automatically “is recognized.”

Separately: the term “controlling person” exists in three different laws at once (on bankruptcy, on the securities market, and in the Tax Code on controlled foreign companies), each with a different meaning, none of which matches 115-FZ.

Nominee Holder and “a Nominee”: Two Different Things

“Nominee holder” is a statutory term from securities market law (Federal Law No. 39-FZ, Article 8.3): a depositary on whose personal account the rights to other persons’ securities are recorded. It’s a legitimate recordkeeping institution, unrelated to concealing a beneficial owner.

“A nominee” in the everyday sense is a word with no statutory definition: it’s used to describe a person on whom an interest is formally registered, even though actual control and interest belong to someone else.

Why Establish a Beneficial Owner: Three Levels of Obligation

The law doesn’t impose this obligation on everyone equally: there are three levels, each addressed to a different party.

What a Company Is Required to Know About Itself: Article 6.1

Every legal entity is required to have information about its beneficial owners and to take reasonable measures to establish it (Article 6.1(1)): update it at least once a year or when the information changes, with documented recording (6.1(3)(1)); retain it for at least five years from the date the information was obtained (6.1(3)(2)); the company is entitled to request it from founders, participants, and other controlling persons (6.1(4)), and they are required to provide it — which is not a violation of personal data law (6.1(5)); on request from Rosfinmonitoring (the Federal Financial Monitoring Service), the tax authorities, or the Ministry of Justice, provide the information within 7 business days (Government of the Russian Federation Rules No. 913, as amended 16 July 2025), and if errors are found in information already submitted, send a correction no later than 5 business days later (6.1(6)).

Non-compliance carries a fine under Article 14.25.1 of the Administrative Offenses Code: ₽30,000 to ₽40,000 for officials, or disqualification for up to a year; ₽100,000 to ₽500,000 for legal entities.

Five categories are exempt: government bodies and organizations with more than 50% state participation, international organizations and foreign states, religious organizations, issuers of securities admitted to organized trading, and foreign organizations listed on an exchange from the Bank of Russia’s list. Foreign legal entities and structures without legal-entity status operating in Russia are not on this list — on the contrary, Article 6.1 explicitly extends the same obligations to them.

Who Is Required to Vet Customers’ Beneficial Owners

Only the organizations listed in Article 5 (banks, insurance organizations, professional securities market participants, pawnshops, and others — a closed list) and the persons listed in Article 7.1 (attorneys, notaries, accounting and legal services — for certain transactions on a client’s behalf) are required to identify their customers’ beneficial owners. The law’s wording — “take reasonable and available measures” — is an obligation to take measures, not a guarantee of finding the beneficial owner. The timeframes for updating customer information are their own: low risk, once every three years; others, once a year; if there are doubts about accuracy, seven business days. Requirements for fintech companies are covered in the article “Fintech Compliance Under Federal Law 115-FZ”.

Vetting a Counterparty: Voluntary, But Justified

For everyone else, 115-FZ doesn’t require vetting a counterparty’s beneficial owners. It can be part of commercial prudence when choosing a counterparty; the Federal Tax Service (FNS) addresses approaches to assessing the circumstances of that choice, among other things, in Letter No. BV-4-7/3060@ of 10 March 2021. A checklist for vetting a company and its beneficial owners is in the article “How to Vet a Company and Its Beneficial Owners Before a Deal.”

Why the Bank Sent a Questionnaire, and What to Write in It

If the organization you work with falls under Article 5 or 7.1 — a bank, a broker, an insurance company — sooner or later it will send you a beneficial-owner questionnaire. The recipient of the request is either the client company itself, asked to disclose its ownership structure, or a specific natural person the organization has already classified as a beneficial owner based on the information it has collected.

The “grounds for classification” field in the questionnaire isn’t a suspicion — it’s the formal basis on which the organization considers the person a beneficial owner: a capital interest above 25% according to EGRUL or the founding documents, or signs of control — a position in the management bodies, signing authority, involvement in decision-making. You should answer based on factual data, not assumptions: if the grounds are wrong, this can and should be explained in writing, with supporting documents attached. If they’re correct, the questionnaire’s job is to confirm what’s already been established, not to create a new obligation for whoever is answering.

How to Establish a Beneficial Owner: Step by Step

Neither 115-FZ nor its subordinate regulations set out a single methodology, but a working procedure emerges from Rosfinmonitoring’s recommendations and the logic of the law.

A company can have several beneficial owners at once — if more than one natural person meets the criteria, all of them are recognized.

Finding the Ultimate Beneficiary: Four Ways to Collect Information

Rosfinmonitoring’s methodological recommendations name four ways to collect information: including an obligation to disclose beneficial owners in a contract or public offer; questionnaires for the client; studying founding documents and an oral inquiry; and using legally available external sources — media, the internet, commercial databases.

Ownership Structure: How to Build the Chain and Calculate an Indirect Interest

A Worked Example: Why 60% of a Holding Company Comes Out to 24%

Target LLC is owned by Holding Company Alpha (40%), Individual V (30% directly), and 15 minority holders (2% each). Holding Company Alpha is owned by Individual A (60%) and Individual B (40%).

Check: 24 + 16 + 30 + 30 = 100%.

Three conclusions about finding the ultimate beneficiary. The first tier isn’t enough: the extract shows “Holding Alpha — 40%,” and it’s tempting to record its owner as the beneficial owner, but multiplying the interests gives 24% — one point below the threshold. A holding company’s majority owner may not be a beneficial owner, while a direct minority holder may be: A controls the holding company but isn’t a beneficial owner by ownership, while V, with their 30%, is. And the check doesn’t end there: if A chairs the board of directors or controls a majority of votes under a corporate agreement, they’re already a beneficial owner by the control criterion, despite the 24%.

When No One Has More Than 25%

Replace Individual V with a second holding company: Holding Beta — 30% of the LLC, with Individuals G and D at 50% each, and 10 minority holders at 3% each, directly. The math: A — 24%, B — 16%, G — 15%, D — 15%, minority holders — 3% each (check: 24 + 16 + 15 + 15 + 30 = 100%). No one reaches more than 25%: the ownership criterion doesn’t trigger, and the control criterion is checked next; if that isn’t established either, the sole executive body may be recognized as the beneficial owner, but only after documented measures, not automatically.

Where to Look for Information, and Where Each Source Runs Out

Each source has its own limit.

What EGRUL Shows for an LLC, and Why It Shows Almost Nothing for a JSC

For an LLC, EGRUL shows the size and nominal value of each participant’s interest, information about a pledge or other encumbrance on the interest, an attachment, or trust management. But there’s no information about beneficial owners there at all: the register shows participants, not who stands behind them, and if a participant is itself a legal entity, the chain has to be traced further.

For a JSC, it’s stricter: EGRUL contains only information on whether the company consists of a sole shareholder, and details of the shareholder register keeper. If there are several shareholders, their composition isn’t reflected in EGRUL at all — this is a technical feature of the register, not the business being closed off, and it’s the main reason the chain breaks off at the first JSC.

A practical marker is information about a corporate agreement: EGRUL records information about an agreement that sets out participants’ powers disproportionately to their interests — a publicly available sign that votes and interests don’t match, a signal to take a closer look at the control criterion.

Company Documents and Requesting Information

The list of an LLC’s participants is maintained by the company itself; the general meeting has the right to hand its maintenance over to the Federal Notary Chamber (in which case the information goes into the register of LLC participant lists in the unified notary information system), but that’s a specific company’s right, not the general procedure. It’s an internal document, not a public register; if it conflicts with EGRUL, the right to an interest is established according to EGRUL. A request under Article 6.1 — through Rosfinmonitoring, the tax authorities, or the Ministry of Justice, with a 7-business-day response deadline — is a tool for government bodies, not for businesses.

Foreign Registries: Access Has Changed

In the UK, Companies House maintains a public register of persons with significant control — the PSC register: it includes those who own more than 25% of the shares or voting rights, or otherwise control the company. An important caveat: the company declares this information about itself, and since November 2025, PSCs have also been required to verify their identity — it’s the person who’s verified, not the ownership structure. OpenCorporates is an aggregator of public registers: it has no beneficial-owner data of its own; it only reproduces what national registers disclose.

You can no longer freely look up the beneficial owners of a European company. In November 2022, the Court of Justice of the EU struck down the rule providing open access to beneficial-owner registers for anyone who wanted it, and now the information is released to those who can demonstrate a legitimate interest — under the rules of the country maintaining the register. A single EU-wide access procedure with mutual recognition of such an interest is being introduced by a 2024 directive and applies from 10 July 2027.

As of the date this article was prepared, there is no single public register of beneficial owners in Russia: the information is kept by the company itself and provided on request to authorized bodies. From 1 January 2027, the Bank of Russia resumes publishing information about the ownership structure of financial organizations — banks, non-state pension funds, insurance organizations, management companies, and microfinance companies — but in anonymized form, through a set of 14 criteria answered “yes,” “no,” or “not applicable.” This format doesn’t disclose the specific beneficial owners of a given company.

Control Without an Interest, and Nominee Ownership

The formal holder of an interest and the beneficial owner aren’t necessarily the same person. This is exactly the case the second, independent criterion in the 115-FZ definition addresses: the ability to control the client’s actions, which requires no ownership interest at all.

A participant with an interest recorded in EGRUL isn’t always the company’s ultimate beneficiary, and a person with no interest at all sometimes turns out to be. The ownership criterion checks the percentage of the capital; the control criterion checks the actual ability to determine the company’s decisions, and that ability may not match the distribution of interests at all.

Rosfinmonitoring’s methodological recommendations (Letter No. 57) give examples of control without an ownership interest:

• manage the company solely or jointly on the basis of civil-law relations
• manage through personal contacts with responsible employees
• exert influence through involvement in financing, close family ties, historically established relationships, or the company’s default on its obligations
• are responsible for strategic decisions
• exercise executive control over day-to-day operations at the senior-management level
• can exert material influence over the organization’s activity under a contract

Registering an interest in another person’s name isn’t, by itself, prohibited by law or equated with a scheme — how it’s characterized depends on the actual circumstances, not on this fact alone.

Beneficial Owner in FATF Standards, and How the Russian Definition Differs

The Russian definition relates to the FATF (Financial Action Task Force) standards but doesn’t copy them word for word. According to the FATF General Glossary to the Recommendations, as rendered in the unofficial Russian translation prepared by MUMCFM, a beneficial owner is understood to be the natural person or persons who ultimately own or control a customer, and/or the natural person on whose behalf a transaction is being conducted; this also includes any natural persons who exercise full control over a legal person or arrangement.

Four differences: the threshold — FATF doesn’t set one, while 115-FZ strictly requires “more than 25 percent”; the scope of the concept — FATF’s own definition also includes the natural person on whose behalf a transaction is being conducted, while under 115-FZ that’s a separate role, the beneficiary; the logic of application — FATF describes a strict cascading sequence (controlling ownership interest → control on other grounds → senior managing official), while 115-FZ formulates the two criteria as alternatives joined by “or,” leaving the sole executive body as a discretionary option; the last step — FATF’s senior managing official, 115-FZ’s specifically the sole executive body.

The approaches agree on the general principle, but not in their literal wording. And FATF itself acknowledges: reasonable measures don’t always succeed in establishing the beneficial owner’s identity — no standard guarantees a one-hundred-percent result.

Sanctions and Publicly Exposed Persons: Why a Specific Person Is Needed

Establishing a specific natural person matters for more than just reporting — it’s the point from which list screening becomes possible: against sanctions lists and lists of politically exposed persons (PEPs). For more on how that screening works, see the article “How Sanctions Screening, PEP Checks, and Risk Profiling Work”.

Three Sanctions Regimes, Three Different Rules

• OFAC (US) looks only at ownership: a company is blocked if blocked persons own 50% or more of it in the aggregate (interests under different programs are added together). Control without such an interest doesn’t trigger automatic blocking — the rule states this directly: “speaks only to ownership and not to control.” Note: in practice, the 115-FZ threshold is calculated by multiplying interests along the chain, while under the OFAC rule, an indirect ownership interest means an interest held through a company that is itself owned 50% or more by blocked persons — not a multiplied-out interest.
• The EU looks at both ownership (more than 50%) and control under eight criteria — for example, the right to appoint a majority of management; the presumption of control is rebuttable.
• The UK — more than 50% of shares or voting rights, or the right to appoint or remove a majority of the board of directors, or a reasonable expectation that the entity’s affairs are conducted in accordance with that person’s wishes. A minority interest on its own doesn’t trigger sanctions.

The claim “a beneficiary on a sanctions list means the company is automatically under sanctions” is inaccurate for all three regimes: the outcome depends on the interest held, aggregation with other blocked persons’ interests, and the presence of control — and it’s checked separately under each applicable regime. For more, see the article “AML for International Onboarding: How to Screen Customers Against the OFAC, EU, and UK Lists”.

An established beneficial owner is exactly the person it makes sense to also check against PEP lists: the law requires identifying this status as a separate requirement for natural persons being onboarded (Article 7.3), but in practice it’s the next step specifically after the beneficial owner has been established.

Complex Structures and Common Mistakes

Situations that standard materials rarely cover.

Foreign structures without legal-entity status — trusts and their equivalents. For these, 115-FZ requires establishing the composition of the assets under management and the details of the settlors (participants), the trustee (manager), and any protectors. FATF’s approach is broader: several roles at once are considered a trust’s beneficial owner — the settlor, the trustee, the protector, each beneficiary, and any other person with ultimate effective control.

Foreign companies from closed jurisdictions. Regulation 499-P separately provides for the case where a non-resident client’s structure doesn’t involve either a beneficial owner or a sole executive body — in that case, the organization records this fact in the client’s questionnaire (file) rather than manufacturing a beneficial owner artificially.

Five common mistakes:

• “The beneficial owner is the founder” — the founder may have left the ranks of participants, and a participant may turn out to be a legal entity
• “The beneficial owner is the director” — the position alone doesn’t constitute the criterion; the sole executive body may be recognized as the beneficial owner only if no other person is identified and after measures have been taken
• “Just check EGRUL” — EGRUL contains no information about beneficial owners, and for a JSC it doesn’t even show the shareholder composition
• “Couldn’t find the beneficial owner — write down the director” — under Rosfinmonitoring Letter No. 57, a client’s mere failure to provide information cannot be unconditional grounds for this decision without analysis and documentation of the measures taken
• “The 25% threshold was set by FATF” — the standard doesn’t set a threshold; 25% is only an example in a footnote to the Interpretive Note to Recommendation 10

How to Automate Beneficial-Owner Verification

Manually assembling the ownership structure for a single company is entirely feasible: an EGRUL extract, founding documents, a questionnaire — that’s enough for one structure. With a high volume of counterparties, part of the process of identifying beneficial owners and the subsequent screening can be automated. The industry calls this kind of check on a counterparty company and its beneficial owners KYB (Know Your Business).

NeuroVision’s KYB check for companies and beneficial owners builds the ownership chain and outputs the ultimate beneficial owners, directors, and related parties, includes AML screening against sanctions, PEPs, Rosfinmonitoring databases, and an adverse-media module, supports ongoing monitoring, and works with companies from 100+ countries, including EGRUL, Companies House, and OpenCorporates. The check is triggered through the API or a questionnaire, complex cases are handled by specialists, and founding documents are parsed through OCR. The decision to recognize a natural person as the beneficial owner remains with the organization.

For more on how to build the entire AML and KYB compliance process for a flow of B2B customers, see the article “AML, KYB, and Beneficiary Verification: How to Build Compliance for B2B Customers”.

FAQ

Who is a beneficial owner, in simple terms?

An actual person who ultimately owns or runs the company — even if someone else is formally named in the documents. Under 115-FZ (Article 3), a beneficial owner is a natural person who, directly or indirectly, owns more than 25% of the company's capital or controls its actions. A legal entity cannot be a beneficial owner.

How does a beneficial owner differ from a founder and a director?

These are three different roles that may or may not coincide. A founder may have exited the ranks of participants long ago. A director is the sole executive body — the position itself doesn't make them a beneficial owner. A beneficial owner is determined by owning more than 25% of the capital, or by control: a participant with a 20% interest isn't one, while a person with no interest at all might be, if they control the company's decisions.

How does a beneficial owner differ from a beneficiary?

Only a natural person can be a beneficial owner — through owning or controlling the company. A beneficiary is a person to whose benefit the client acts under a contract (agency, mandate, commission, trust management); this can also be an organization. The first is about power over the company; the second is about the benefit from a specific transaction.

Can you find out a beneficial owner from EGRUL?

No. For an LLC, the register shows the participants and the size of their interests — but a participant may turn out to be another company, and the chain has to be traced further. For a JSC, EGRUL contains only information about a sole shareholder, if there is one, and about the shareholder register keeper; there's no shareholder composition there. There is no single register of beneficial owners in Russia.

What if no one has more than 25%?

The ownership criterion doesn't trigger — the second criterion, control, needs to be checked: a corporate agreement, the right to appoint leadership, involvement in financing, long-standing business ties. If no one can be established even so, the sole executive body may be recognized as the beneficial owner, but only after measures have been taken and documented: a client's mere failure to provide information isn't enough on its own.