Back in 2020, US Congress passed the Corporate Transparency Act. Though the act has not yet been implemented – pending oversight by FinCEN (Financial Crimes Enforcement Network) and final regulations – once it is enforced, almost every private company in the US will have to file a beneficial ownership report which meets specific data requirements.
But how do UBO disclosure requirements differ across the world? How can an ultimate beneficial owner be defined? What information, if any, must be collected and where does this data live? It’s time to take stock of the wonderful world of UBO requirements.
The first, and arguably most popular, misconception is that blockchain’s only use is in digital currencies. This misconception is likely to have arisen because digital currencies were the first to apply the technology.
However, blockchain can record all sorts of transactions, making it suitable for use in many industries. De Beers and Walmart are using blockchain in supply chain management; the FDA and Pfizer are using it in healthcare; MetLife and AIA Group are using in insurance; Maersk and FedEx are using it in logistics, and so on.
Another common misconception about blockchain technology is that it’s only good for nefarious purposes. This association may have been drawn from its association with digital currencies used to facilitate online crime.
While it’s true that digital currencies have been used to commit crimes, this represents only a small fraction of the overall picture, and blockchain’s association with crime is misplaced. There are several examples where blockchain has been used to fight crime to great effect.
Since public blockchains are immutable, many companies are integrating the technology to prevent crimes like counterfeiting.
With the rise of blockchain technology, several institutions have sought to build private databases that pose as blockchain networks while still retaining control of these networks. These databases are often known as “private blockchains”.
Some people have come to believe that these private blockchains are more suitable for enterprise use, which isn’t the case. The Bitcoin blockchain, which is public, was created by Satoshi Nakamoto to scale and accommodate enterprise applications. Additionally, there exist techniques that enterprises can use to safeguard their privacy on the blockchain.
Creating a blockchain involves an extreme amount of computing power, which requires multiple computers solving mathematical equations to agree on one immutable result, which becomes known as the single version of truth (SVT). Because so much energy is required to solve these equations and add blocks, it can be costly to build and maintain a blockchain.
Blockchain is a relatively new technology and many governments have yet to formulate regulations to control its use. This has led to a misconception that blockchain is beyond the reach of authorities, which is not the case, and neither is the misconception that blockchain transactions are anonymous.
Blockchain is subject to regulations and governments have a responsibility to control its use to protect the public. Authorities are already using blockchain analytics software to monitor public blockchains and narrow down illegal activities.
It is an area of technology where regulators, governments, and businesses are converging to embrace the use of blockchain together to create more efficiency and security.
Moody’s Analytics KYC is transforming risk and compliance. We have customers of all types and sizes ranging from fintechs to banks to insurance providers and government departments. We are developing innovative solutions, so our customers can create their own unique ecosystem for risk management and KYC compliance.
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