Beneficial ownership refers to the individuals or entities that ultimately benefit from and control a legal entity, such as a company or trust. The Ultimate Beneficial Owner (UBO) is the person or entity with significant ownership or control over an organization, even if they are not listed as the legal owner. Identifying UBOs is crucial in preventing money laundering and fraud because it reveals the true beneficiaries behind complex corporate structures. Financial institutions are required to conduct due diligence to identify UBOs as part of their anti-money laundering (AML) and Know Your Customer (KYC) procedures.