Personify Sherlock Holmes: Uncovering the Ultimate Beneficial Owner

By Alia Noor, FCMA, CGMA, MBA
UAE Registered Tax Agent | Associate Partner – Taxation & Compliance Advisory
Ahmad Alagbari Chartered Accountants

“It is a capital mistake to theorize before one has data.”
— Sherlock Holmes, A Study in Scarlet

For a compliance professional trying to identify an Ultimate Beneficial Owner (UBO), few principles are more relevant.

A corporate structure tells you who appears on the register. It may tell you who holds the shares. It may even provide a perfectly organised ownership chart.

But does it tell you who ultimately controls the company?

Not always.

The immediate shareholder may itself be a company. That company may sit beneath another holding entity. Voting rights may differ from economic ownership. A person without an obvious majority shareholding may nevertheless exercise decisive control.

The task, therefore, is not simply to read the corporate structure.

It is to understand what lies behind it.

That requires something Sherlock Holmes understood particularly well: observation before assumption, evidence before conclusion.

The Shareholder Is Not Always the Beneficial Owner

For legal persons within the scope of the UAE beneficial ownership framework, identifying the Beneficial Owner generally begins with the natural person who ultimately owns or controls 25% or more of the capital or voting rights, directly or indirectly, including through a chain of ownership or control.

The words “directly or indirectly” are crucial.

Consider a simple example.

A natural person owns 60% of Holding Company A. Holding Company A owns 50% of Company B.

The individual's indirect economic interest in Company B is therefore 30%.

Company B's immediate shareholder may be Holding Company A, but the analysis cannot simply stop there. The ownership chain needs to be traced through the corporate shareholder to the natural person behind it.

That leads to the first important principle:

Legal ownership tells you where to start. Beneficial ownership tells you where to look next.

The 25% Threshold Is Not the Whole Story

Now consider a more difficult situation.

No natural person appears to meet the 25% ownership threshold.

Does that mean there is no Beneficial Owner?

Not necessarily.

Beneficial ownership is not purely a mathematical exercise. The UAE framework also considers control through other means, including control through rights such as the ability to appoint or dismiss a majority of directors.

Where no natural person can be identified after applying the ownership and other means of control tests, the natural person holding the relevant Senior Management position is treated as the Beneficial Owner under the prescribed fallback mechanism.

This distinction is fundamental:

Ownership is evidence of control. It is not the only evidence of control.

A compliance review that concentrates exclusively on percentages may therefore miss the very person the UBO rules are designed to identify.

When the Structure and the Facts Tell Different Stories

Complex corporate structures are not inherently suspicious.

International groups legitimately operate through holding companies, subsidiaries and entities across multiple jurisdictions for commercial, investment, financing, regulatory and other reasons.

The relevant question is not whether the structure is complicated.

The question is whether the structure can be understood and substantiated.

Greater scrutiny may be appropriate where the ownership structure appears unnecessarily opaque, the natural person exercising ultimate control cannot readily be established, or corporate records conflict with information obtained through Customer Due Diligence.

Other circumstances may also warrant closer examination: significant unexplained changes in ownership or control, a person with limited apparent ownership exercising disproportionate influence, or a customer unable or unwilling to provide a coherent explanation of who ultimately controls the business.

None of these circumstances, by itself, proves financial crime.

But contradictions matter.

Sometimes the most important evidence is the fact that does not fit.

That is where professional scepticism becomes more valuable than another completed checklist.

A UBO Register Is a Living Record

Identifying the Beneficial Owner is not a one-time incorporation exercise.

Ownership changes. Shares are transferred. Group structures are reorganised. Voting arrangements change. Individuals acquire or lose control.

Legal persons within scope of the UAE regime are required to maintain prescribed Beneficial Owner information. Where prescribed information changes, the records must be updated and the Registrar notified within the applicable timeframe — generally within 15 days of the legal person becoming aware of the change.

The practical implication is important:

Yesterday's correct UBO information can become today's compliance weakness if nobody updates it.

The UBO Register should therefore reflect the current reality of ownership and control — not simply what was true when the entity was established.

It is also important to recognise that the UAE beneficial ownership regime contains scope provisions and exclusions, including in relation to legal persons established in Financial Free Zones and certain government-owned entities. The applicable regulatory framework should therefore always be determined before assessing an entity's obligations.

Where Beneficial Ownership Meets AML

UBO identification is not merely a corporate filing exercise.

It is also fundamental to effective Customer Due Diligence (CDD).

The UAE's current AML framework under Federal Decree-Law No. 10 of 2025 addresses the Beneficial Owner as the natural person who ultimately owns or exercises effective control over a customer, directly or indirectly, including through a chain of ownership or control or other indirect means.

For AML purposes, therefore, knowing the legal name of a corporate customer is not enough if the natural person ultimately owning or controlling that customer remains unidentified.

A meaningful CDD review should be capable of answering five questions:

Who ultimately owns the customer?
Who ultimately exercises control?
Does the ownership structure make commercial sense?
Is the information consistent with reliable evidence?
Can we demonstrate how we reached our conclusion?

That last question deserves particular attention.

A conclusion without an audit trail can be difficult to defend.

Think Like Sherlock Holmes

Technology has transformed beneficial ownership analysis.

Corporate databases can be searched. Names can be screened. Indirect ownership can be calculated. Complex structures can be mapped.

But technology cannot replace professional judgement.

A system can identify a percentage. A compliance professional must understand what that percentage means.

Sherlock Holmes' method was not about assuming everyone was suspicious. It was about refusing to ignore facts simply because they complicated the obvious explanation.

The same discipline belongs in UBO analysis.

Do not stop at the first shareholder.

Do not assume that 25% answers every question.

Do not mistake a completed register for a completed analysis.

Instead, establish the facts, understand the relationships and determine where ultimate ownership and control actually rest.

Because the most important question in beneficial ownership is not:

“Whose name is on the company?”

It is:

“Who is ultimately behind it — and can you prove it?”

That is where beneficial ownership stops being a percentage on an ownership chart and becomes what it was intended to achieve:

Transparency.

Disclaimer

This article is intended for general information and educational purposes only and does not constitute legal, tax, regulatory or professional advice. Beneficial ownership and AML/CFT requirements may vary depending on the nature of the entity, applicable jurisdiction, regulatory authority and specific facts and circumstances. Readers should refer to applicable UAE legislation, regulations and guidance issued by the relevant Competent and Supervisory Authorities and seek appropriate professional advice where required.