Beneficial Ownership and Sanctions Screening: The Cross-Border Checks Deals Still Get Wrong

Conceptual illustration. It does not depict a PJN Group office, client, transaction or screening system.

In a cross-border transaction, the name on the contract is rarely the whole risk story.

A counterparty may be represented by a local subsidiary, owned through several holding companies, directed under shareholder agreements, or connected to a person who does not appear in the first company-register search. At the same time, sanctions rules may apply to an entity that is not named on an official list because it is owned or controlled by a designated person.

This is why beneficial ownership and sanctions screening should be treated as connected but distinct exercises.

A beneficial-owner check asks: who ultimately owns or controls the counterparty, and on whose behalf is the transaction being conducted?

A sanctions check asks: are any relevant parties subject to applicable restrictions, including through ownership or control, and would the proposed activity be prohibited?

The thresholds, definitions and consequences are not identical. Applying one jurisdiction’s test to another is one of the most common weaknesses in cross-border deal preparation.

The first mistake: treating PSC, UBO and beneficial owner as interchangeable

The terms are related, but they do not always mean exactly the same thing.

In the UK, a person with significant control, or PSC, is identified under the Companies Act 2006 regime. Companies House guidance generally points to a person who:

• holds more than 25% of the shares;
• holds more than 25% of the voting rights;
• can appoint or remove a majority of the board; or
• otherwise exercises significant influence or control in circumstances covered by the statutory framework.

The PSC regime is a corporate transparency mechanism. It does not, by itself, answer every anti-money-laundering or sanctions question.

For example, a person may fall within a beneficial-ownership analysis under AML rules even where the information on a public corporate register is incomplete, differently defined or not yet updated. Companies House itself notes that the PSC concept and the beneficial-owner concept used under money-laundering regulations are not always identical.

In the UAE, beneficial ownership requirements are anchored in Cabinet Decision No. 58 of 2020 on Regulating Beneficial Owner Procedures. The UAE framework focuses on identifying the natural person who ultimately owns or controls a legal person, including through ownership, voting rights or control over the appointment of directors. The relevant licensing or registration authority may determine the practical filing process, and the position should be checked for the entity’s specific jurisdiction and legal form.

Across the EU, the consolidated text of Directive (EU) 2015/849 uses a beneficial-owner definition centred on the natural person who ultimately owns or controls the customer or on whose behalf a transaction is conducted. A shareholding of 25% plus one share, or an ownership interest of more than 25%, is an indication of direct ownership under the Directive. EU rules are implemented through national law, so a review should not stop at the text of the Directive.

The practical conclusion is straightforward: a register extract is evidence, not a substitute for analysis.

Conceptual illustration of tracing ownership and control through layered entities.

The second mistake: using the 25% threshold as a sanctions test

A 25% ownership threshold is often used as an important indicator in beneficial-ownership and AML analysis. It is not the general UK financial-sanctions ownership threshold.

Under current OFSI guidance, an entity may be owned or controlled by a designated person where, among other circumstances:

• the designated person holds more than 50% of the shares or voting rights;
• the designated person has the right to appoint or remove a majority of the board; or
• it is reasonable to expect that the designated person can ensure the entity’s affairs are conducted in accordance with their wishes.

If one of those conditions is met, financial sanctions may apply to the entity even if the entity is not separately named on the UK Sanctions List.

That creates an important difference between the exercises:

Question	Typical focus
Who is the beneficial owner?	Ultimate natural ownership, control and the person on whose behalf activity is conducted
Who is a UK PSC?	Statutory ownership and control conditions under the Companies Act 2006
Is the entity subject to UK financial sanctions through ownership or control?	More than 50% ownership or voting rights, board rights or relevant de facto control
Is there a sanctions name match?	Whether the counterparty is the same person or entity as the listed entry

A structure can therefore require further investigation even where no individual holds more than 50%. Board appointment rights, voting agreements, veto rights, financing arrangements, nominee relationships and informal influence may all be relevant to the factual analysis.

The third mistake: screening only the contracting entity

A sanctions search of the immediate counterparty is a necessary starting point, not the end of the process.

Before committing to a transaction, the review should normally identify:

1. the contracting entity;
2. its directors and authorised representatives;
3. direct shareholders;
4. intermediate holding companies;
5. the ultimate natural persons behind the structure;
6. persons with relevant voting, appointment or control rights;
7. the source and destination of funds;
8. banks, intermediaries, agents and other material transaction participants; and
9. any beneficial recipient or person acting on whose behalf the transaction is conducted.

The depth of the review should be proportionate to the risk. A simple domestic supplier and a multi-jurisdiction investment vehicle will not require identical work. However, a complex structure should not be treated as low risk merely because each individual ownership link appears below a headline threshold.

OFSI states that there is no complete official list of all entities owned or controlled by designated persons. Firms must therefore conduct their own due diligence and assess the facts available to them.

This is particularly important where ownership is layered across jurisdictions with different registers, disclosure standards, languages or update cycles.

A practical framework before committing to a counterparty

1. Define the legal perimeter

Start by recording the jurisdictions that may be relevant to the transaction.

This may include:

• the place of incorporation of each party;
• the location of branches or operations;
• the nationality or legal status of decision-makers;
• the location of assets;
• the payment route and clearing banks;
• the governing law of the contract; and
• any jurisdiction connected with goods, services or financing.

A UK company may remain subject to UK sanctions requirements when acting outside the UK. A transaction involving the UAE or an EU member state may also engage local rules, regardless of whether the contract is signed elsewhere.

Do not assume that one sanctions regime displaces another. Separate assessments may be necessary.

2. Build an ownership and control map

Obtain corporate documents rather than relying solely on a database summary. Depending on the case, this may include:

• certificates of incorporation;
• current registers of shareholders;
• constitutional documents;
• shareholder agreements;
• voting or control arrangements;
• trust or nominee information;
• director appointment rights;
• group charts;
• licences or registrar extracts; and
• evidence explaining any unexplained ownership gap.

The objective is to reach natural persons and to document where the chain cannot be verified.

A statement that “no person owns more than 25%” is not a sufficient conclusion if another person can appoint the board or direct material decisions.

3. Screen names using the correct official sources

For UK financial sanctions, use the current UK Sanctions List and retain the date and time of the search. Do not rely on an undated spreadsheet, an old consolidated-list extract or a third-party summary as the sole source.

A name match is not automatically a target match. OFSI distinguishes between a name match and a match supported by identifying information such as date of birth, nationality, address, position or other identifiers.

At the same time, a lack of an exact name match does not clear an entity if ownership or control creates a sanctions risk.

4. Reconcile the documents

Compare what the counterparty has provided with independent evidence.

Look for:

• inconsistent ownership percentages;
• unexplained changes in directors;
• different addresses across documents;
• shareholders that appear to be nominees;
• ownership chains that stop at another corporate vehicle;
• payments from unrelated third parties;
• a mismatch between business activity and stated transaction purpose; and
• resistance to providing ordinary ownership information.

None of these points proves misconduct on its own. They are reasons to pause, clarify and document the assessment.

5. Set escalation rules before the deal becomes urgent

The review should specify what happens when information is incomplete or a potential match appears.

Possible controls include:

• no signing or payment until the issue is resolved;
• senior review of the ownership and control analysis;
• independent legal advice on sanctions exposure;
• a request for additional corporate or banking evidence;
• confirmation of any applicable licence or exception; and
• a written record of the decision and its assumptions.

Speed is not a substitute for a defensible process. A transaction that cannot be explained clearly after completion was not adequately assessed before commitment.

Conceptual illustration. It does not represent a real sanctions database or screening tool.

Why register data should be time-stamped

Ownership information changes. So do sanctions lists, control structures, corporate registrations and applicable guidance.

A check completed at the start of negotiations may no longer be sufficient at signing, payment, completion or any later refinancing. The risk-based review should identify monitoring points, particularly where:

• the transaction is prolonged;
• ownership is expected to change;
• the counterparty is part of a fast-moving group;
• the deal involves staged payments;
• sanctions exposure is linked to a changing political or regulatory environment; or
• the arrangement includes ongoing services or asset management.

The record should state what was checked, when it was checked, which sources were used, who performed the review and what limitations remained.

What PJN Group can and cannot claim

PJN Group is a family of connected companies with shared ownership, with businesses owned, operated or strategically backed by Clear Ledger across the UK, UAE, Croatia/Europe and India. The Group includes activity and expertise across advisory, property, construction, technology, cybersecurity, marketing and associated business services.

PJN Group also provides due diligence on investment opportunities for institutional investors, including sovereign wealth funds. That positioning reflects the Group’s broader international network and experience; it does not mean that every portfolio company provides the same service or holds the same permissions.

This article is general educational information. It is not legal, tax, sanctions or investment advice, and it is not a report on a specific PJN Group client, transaction or portfolio company. Any live transaction should be reviewed against the law and official guidance applicable to the relevant parties, jurisdictions and facts.

Final checklist

Before committing to a cross-border counterparty, ask:

• Have we identified the natural persons behind the structure?
• Have we examined control rights as well as share percentages?
• Have we separated PSC, UBO, AML and sanctions concepts?
• Have we screened the relevant people and entities against current official lists?
• Have we considered entities owned or controlled by designated persons?
• Have we mapped the payment route and other material participants?
• Have we reconciled registry data with transaction documents?
• Have we recorded unresolved gaps and escalation decisions?
• Have we set a date for repeat checks?
• Have we obtained jurisdiction-specific legal advice where the facts are uncertain?

The strongest due-diligence process is not the one that produces the fastest clearance. It is the one that makes the ownership, control, sanctions exposure and remaining uncertainty understandable before the parties become committed.

Primary sources checked

• Companies House: People with significant control (PSCs), GOV.UK guidance, published 9 November 2020 and updated 30 July 2026; checked 1 October 2026.
• Companies Act 2006, Schedule 1A: UK statutory PSC framework; checked 1 October 2026.
• OFSI: UK financial sanctions general guidance, current online guidance on sanctions, ownership and control; checked 1 October 2026.
• UK Sanctions List: official UK sanctions-designation source; checked 1 October 2026.
• OFSI: UK financial sanctions FAQs, supplementary guidance on ownership and control, including entities not separately listed; checked 1 October 2026.
• UAE Central Bank Rulebook: Cabinet Decision No. 58 of 2020, UAE beneficial-owner framework; Cabinet Decision issued in 2020 and effective from 28 August 2020; checked 1 October 2026.
• UAE Beneficial Owner Portal: UAE beneficial-ownership information resource; checked 1 October 2026.
• UAE Ministry of Economy materials on beneficial ownership: official UAE Ministry resource; checked 1 October 2026.
• EUR-Lex: Directive (EU) 2015/849, consolidated text, consolidated version dated 30 December 2024, including beneficial-ownership and customer-due-diligence provisions; checked 1 October 2026.