Staying compliant in the Middle East starts with understanding the nuances of regional UBO regulations. However, evolving rules for UBO disclosure and regulatory divergence across the region strain teams tasked with ensuring compliance. 

Below, we discuss the regulatory landscape in the region, including the UBO disclosure requirements in the UAE and Saudi Arabia, key challenges and trends across Middle East countries, and how legal technology can help mitigate risks.

Regulatory Landscape: UBO Disclosure Requirements in the UAE and Saudi Arabia

Many of the major economies in the Middle East, including the United Arab Emirates and Saudi Arabia, are members of the Cooperation Council for the Arab States of the Gulf (FCC), which is a member of the Financial Action Task Force (FATF).

Following FATF recommendations, Middle Eastern countries have implemented measures to combat money laundering and illicit activities, including regulations for disclosing ultimate beneficial owners (UBOs) of legal entities. 

UBO Regulations in the UAE

In 2023, the Cabinet of the United Arab Emirates introduced several changes to its UBO disclosure requirements, including Regulation No. 109 on the Real Beneficiary Procedures. The new regulation clarified the rules for identifying ultimate beneficial owners in complex structures and introduced several other important changes.

The current framework for identifying UBOs in the UAE is based on the following principles:

• Defining UBOs: the definition of the UBOs is aligned with widely accepted FATF definitions.
• Exceptions: All entities registered in UAE must report their beneficial owners, except the entities owned by the government, governmental partners, and entities incorporated in financial free zones, including Abu Dhabi Global Market and Dubai International Financial Center.
• Identifying UBOs in Multilayered Structures: If no natural person can be identified as the ultimate beneficial owner, then someone acting as a senior manager is considered to be a company UBO. The new rule gives the power to determine the UBOs to the registration authority in relevant jurisdictions in the UAE, taking into account a risk-based approach.

Saudi Arabia UBO Compliance

Similar to other countries of the Gulf, which follow FATF recommendations, the Kingdom of Saudi Arabia requires legal entities operating within its jurisdiction to report their beneficial owners. According to FATF reports, Saudi Arabia's practices are considered "largely compliant" with FATF rules for UBO disclosure.

UBO reporting requirements in Saudi Arabia are outlined in various legislative frameworks, including:

• Anti-Money Laundering Rules by the Capital Market Authority (CMA): The AML Rules set anti-money laundering regulations, including the definition of beneficial owners, requirements for identifying UBOs, and record-keeping rules.
• Transfer Pricing Guidelines: The TP Guidelines amended by the Zakat, Tax, and Customs Authority (ZATCA) apply to all taxpayers in Saudi Arabia engaged in so-called Controlled Transactions with related parties within the group. The Guidelines oblige entities registered in the Kingdom to maintain a Master File, which includes various corporate records, such as the entity's organizational structure and its legal and beneficial owners.

Key Challenges in UBO Compliance Across the Region

While significant efforts have been made to implement FATF regulations and ensure UBO disclosure, considerable beneficial ownership challenges in the Middle East remain.

Jurisdictional Divergence

While many Middle Eastern countries comply with UBO disclosure best practices, there are significant differences in regulatory requirements.

For example, Regulation No. 109 in the UAE requires all companies to keep a register of beneficial owners and nominee directors at their registered office in the country. 

In Saudi Arabia, companies involved in Controlled Transactions with related entities need to keep information about their UBOs in the Master File, including other corporate data, such as description of group business and transfer pricing policies.

Lack of Clarity on Middle East Compliance

At present, some Middle East countries, such as the UAE, have initiated detailed rules for reporting beneficial owners, including requirements for UBO identification, storage, keeping, and reporting beneficial owner information.

Meanwhile, other jurisdictions, like Saudi Arabia, include UBO reporting requirements within wider Anti-Money Laundering Rules, which provide more general compliance guidelines.

Absence of Public Registers

Similarly, many Middle East countries, including the UAE and Saudi Arabia, still lack public registers on beneficial ownership. At this point, these countries require legal entities to keep information on beneficial owners in their records and report them to authorities within each jurisdiction.

Penalties for Non-Compliance

Similar to other jurisdictions, a failure to ensure Middle East compliance results in various penalties for legal entities. 

For example, in the UAE, a relevant authority has the right to suspend commercial licenses or close legal entities for repeat violations of the UBO disclosure regime, in addition to monetary fines and other administrative penalties. Other jurisdictions have their own set of penalties for non-compliance with UBO disclosures.

Trends in Regional Compliance: What Is Changing in 2025?

At the moment, Middle East compliance rules for beneficial owners continue to evolve to reflect the UBO disclosure best practices. 

In February 2024, FATF removed the UAE from its “grey list”, acknowledging the country’s efforts to align with FATF recommendations. As of October 2024, the FATF grey list for the Middle East mentions only three countries, including Lebanon, Syria, and Yemen.

That said, many Middle East jurisdictions present specific challenges for UBO compliance, including jurisdictional divergence, lack of clarity on compliance and lack of public registers. As the countries continue to evolve their UBO disclosure rules, global companies need to monitor and adjust their compliance agenda to adhere to the shifting regulations.

Leveraging Automation for Seamless UBO Compliance

Global organizations looking to navigate Middle East rules for UBO disclosure can benefit from regional compliance automation. Legal automation technology equips teams to address regulatory uncertainty and evolving requirements effectively.

The list of best practices that can be employed to ensure multi-jurisdictional compliance in the Middle East includes: 

• Providing Clear Governance for Identifying UBOs: While UBO regulations in the UAE, Saudi Arabia, and other Middle East countries continue to evolve, legal teams need to have clear guidelines for identifying beneficial owners in complex structures.
• Centralizing UBO Information: The challenges of Middle East compliance call for centralizing UBO information across all legal entities to avoid omissions and implement automation. 
• Update UBO Data in Real Time: As businesses expand operations and modify their legal entities, maintaining real-time UBO data on a centralized platform ensures compliance and expedites AML/KYC requests and due diligence.
• Creating Automated Workflows: When compliance teams leverage legal automation technology, they can use customizable pre-populated templates and automated deadline tracking to ensure UBO reporting across all their entities.

Navigating Middle East Compliance with Confidence

With evolving UBO regulations, the Middle East poses unique compliance challenges for global organizations. Businesses operating in the region need to constantly monitor the changing regulatory requirements and align their workflows accordingly.

Legal technology provides teams looking to ensure Middle East compliance with the necessary toolset to follow the UBO disclosure best practices. Discover how Athennian's entity management and compliance automation solutions can simplify UBO disclosure—schedule a demo today!