On or around 21 February 2025, the Minister of Commerce of the Kingdom of Saudi Arabia (KSA) enacted the Ultimate Beneficial Ownership (UBO) Rules, bringing the country in line with international transparency standards, particularly those outlined by the Financial Action Task Force (FATF). UBO Rules in KSA Take Effect in April 2025

The issue of beneficial ownership is crucial for various reasons. Opaque ownership structures can be used to conceal illicit activities such as money laundering and fraud. The new UBO Rules aim to close these loopholes, ensuring that businesses operate with integrity and accountability. 

Objectives and Scope of the UBO Rules in KSA 

The primary goal of the UBO Rules is to enhance transparency in corporate ownership by establishing a comprehensive registry of ultimate beneficial owners. This initiative aims to combat financial crimes such as money laundering, terrorist financing, and tax evasion while improving corporate governance standards. 

Defining an Ultimate Beneficial Owner 

Under the UBO Rules in KSA, an “ultimate beneficial owner” is any natural person who meets any of the following criteria: 

• Owns at least 25% of the company’s capital (directly or indirectly). 

• Controls at least 25% of the total voting rights (directly or indirectly). 

• Has the power to appoint or dismiss the majority of the board of directors, chairman, or general manager (directly or indirectly). 

• Exercises direct or indirect influence over the company’s operations or decisions. 

• Acts as the legal representative of any legal entity that meets the above criteria. 

If no individual meets these criteria, the company’s manager, board members, or chairman will be considered the ultimate beneficial owner. 

UBO Rules in KSA: Key Obligations for Companies 

All non-publicly listed companies in KSA must comply with the following obligations: 

• Disclosure at Incorporation: New companies must disclose beneficial ownership data during the incorporation process. 

• Annual Filings: Existing companies must submit an annual report to the Ministry of Commerce disclosing their ultimate beneficial owners. This filing must be completed on the anniversary of their registration on the commercial register. 

• Special Registry: Companies must maintain a dedicated registry of beneficial ownership data, which must be stored within KSA. 

• Updating Information: Under the UBO Rules in KSA, companies must notify the Ministry of Commerce of any changes to beneficial ownership within 15 days. 

• Annual Confirmation: Companies must confirm the accuracy of their disclosed beneficial ownership information annually. 

Who is Exempted from the UBO Rules in KSA? 

Certain companies are exempt from these new regulations, including: 

• Companies wholly owned by the state or state-owned entities (directly or indirectly). 

• Companies undergoing liquidation under the KSA Bankruptcy Law. 

• Other exemptions may be granted on a case-by-case basis by the Minister of Commerce. 

Confidentiality and Penalties 

Beneficial ownership registries will remain confidential and accessible only to regulatory and competent authorities. Companies failing to comply with the disclosure, updating, or annual confirmation requirements may face penalties of up to SAR 500,000 under the UBO Rules in KSA. 

FATF Guidance: The Three Pillars of Beneficial Ownership Information 

To further strengthen global beneficial ownership frameworks, FATF released updated guidance in March 2023, titled Beneficial Ownership of Legal Persons. This guidance emphasizes three key pillars: 

1. Adequate Information 

Beneficial ownership records must contain sufficient details to identify the natural person(s) controlling a company. Required data includes full name, nationality, date of birth, and additional identifiers such as passport or tax identification numbers. Companies must also document the nature and extent of ownership or control exercised by the individual. 

2. Accurate Information 

Verification measures must be implemented to ensure the accuracy of beneficial ownership data. This includes: 

• Cross-referencing official identity documents. 

• Conducting risk-based due diligence. 

• Implementing reporting mechanisms for discrepancies. 

A risk-based approach should be adopted, with enhanced verification measures applied in higher-risk cases. 

3. Up-to-Date Information 

Ownership records must be updated promptly, typically within one month of any changes. Countries must establish enforcement mechanisms to ensure compliance and prevent outdated or misleading information from being used for illicit purposes. 

With the implementation of the UBO Rules in KSA, the region is taking a significant step toward enhancing corporate transparency and aligning with global best practices. Businesses operating in KSA must prepare for compliance by setting up internal procedures to track, update, and verify beneficial ownership information. As further guidance from the Ministry of Commerce becomes available, companies should stay informed to ensure full compliance with the new regulations.