The ultimate beneficial ownership threshold is the level of ownership or voting rights at which a natural person is treated as a beneficial owner of a company or other legal entity. Banks and other regulated firms must identify and verify people above the threshold when onboarding a business customer, and companies must report them to registers. In most major jurisdictions the benchmark is 25 per cent, expressed either as more than 25 per cent or as 25 per cent or more, combined with a separate test for control.
The threshold makes the concept of an ultimate beneficial owner workable in practice. It decides who appears on a beneficial ownership register and whose identity a firm checks during Know Your Business procedures. It is a starting point rather than a limit: firms are expected to look below it where risk is higher.
Ultimate beneficial ownership threshold in plain terms
A company is like a pie cut into slices. Anyone who owns a big enough slice has real influence over what happens to the whole pie. The law draws a line, usually at a quarter of the pie, and says that anyone owning more than that line must be named and checked.
Owning slices through other companies counts too. If you own most of a company that in turn owns part of the pie, you may still end up with a big enough share. And someone who controls the pie without owning much of it, for example by choosing the board, can be treated as an owner as well.
Thresholds in major jurisdictions
| Jurisdiction | Ownership test | Control test |
|---|---|---|
| European Union | Ownership of more than 25 per cent as an indication under the anti-money laundering directives; the 2024 regulation keeps 25 per cent as the benchmark | Control through other means; senior managing official if no owner is found |
| United Kingdom | More than 25 per cent of shares or voting rights | Right to appoint or remove a board majority, or significant influence or control |
| United States, bank CDD rule | 25 per cent or more of equity interests | One individual with significant responsibility to control or manage the entity |
| United States, Corporate Transparency Act | 25 per cent or more of ownership interests | Any individual with substantial control |
The FATF standards do not fix a single figure; its guidance uses more than 25 per cent as an example and leaves countries to set thresholds based on risk. Under the US Corporate Transparency Act, a March 2025 interim final rule limited reporting of beneficial ownership information to certain foreign companies, but the bank rule continues to apply when firms onboard customers.
Calculating indirect ownership
Ownership held through intermediate entities is usually calculated by multiplying percentages along the chain:
where is the share held at each level of the chain. If Person A owns 60 per cent of a holding company that owns 40 per cent of the customer, A's indirect interest is 0.60 × 0.40 = 24 per cent, below a 25 per cent threshold. If A also owns 5 per cent of the customer directly, the total is 29 per cent and A must be identified. Some regulators instead treat a person who controls an intermediate company, for example through a majority stake, as holding that company's entire interest, so firms must follow the applicable local method. This differs from the aggregation used under the sanctions ownership rule, which adds together holdings of different sanctioned persons.
Applying the threshold in practice
Firms use the threshold as a floor. For higher-risk customers, such as companies in high-risk sectors or countries, or those with complex structures, many firms apply lower thresholds of 10 per cent or less as part of enhanced due diligence. Where no individual passes the threshold or holds control, rules generally require the firm to record a senior managing official, while noting that this person is not a true owner. Firms also check for nominee owners and arrangements that spread shares among relatives or associates to stay below the line.
Criticism
A fixed threshold is easy to avoid: five people each holding 20 per cent can hide a single controller, and shell companies in several layers make calculations hard. Critics argue that the 25 per cent figure is too high for detecting corruption and organised crime, and some countries have adopted lower thresholds for all or some entities. Others point out that lower thresholds increase compliance costs and the volume of personal data collected. The control test is meant to address these gaps, but it depends on information that is often informal and hard to verify, which is why firms combine the threshold with a risk-based approach to beneficial ownership.