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AUSTRAC compliance guide

How to verify beneficial ownership in Australia — a guide for professional services firms

Beneficial ownership verification is one of the most complex parts of AML/CTF compliance for Australian Tranche 2 entities. Understanding who really controls your client entities is required by AUSTRAC — and the answer is often less obvious than it appears.

What is a beneficial owner?

A beneficial owner is the natural person who ultimately owns or controls an entity — even if their name doesn't appear on official documents. The definition matters because money laundering often works by hiding the real owner behind layers of corporate structure.

Under AUSTRAC's guidance, a beneficial owner of a company is generally anyone who owns or controls 25% or more of the company's shares or voting rights, directly or indirectly. For trusts, it's the trustee, settlor, and beneficiaries.

Why 25%?

The 25% threshold is used internationally as the point at which ownership becomes significant enough to constitute control. Note that a person with less than 25% may still be a beneficial owner if they exercise control through other means — board positions, veto rights, or nominee arrangements.

Identifying beneficial owners — step by step

For companies:

  1. Search ASIC records for all shareholders
  2. For each shareholder that is itself a company, repeat the process up the chain
  3. Continue until you identify all natural persons owning 25% or more
  4. If no natural person owns 25%+, identify the senior managing official (usually the CEO or equivalent)
  5. Verify each natural person identified as per individual KYC requirements

For trusts:

  1. Obtain and sight the trust deed
  2. Identify the trustee (verify as individual or company)
  3. Identify the settlor (the person who established the trust)
  4. Identify all named beneficiaries and the class of beneficiaries
  5. Assess whether any beneficiary can be identified as receiving 25%+ of trust distributions
  6. Verify each identified beneficial owner

Complex structures: Some clients will have multi-layer structures — an individual who controls a holding company that owns a trust that owns the operating company. You must trace through the entire structure to identify the ultimate beneficial owners. If you cannot identify them, enhanced due diligence (and possibly an SMR) may be required.

Documenting beneficial ownership

You must document the entire beneficial ownership structure — not just the names, but how you identified them and what evidence you have. AUSTRAC expects to see a clear audit trail showing how you reached your conclusions about who the beneficial owners are. A simple organisational chart with evidence at each level is the minimum standard.

Politically Exposed Persons and beneficial ownership

If any beneficial owner is a Politically Exposed Person (PEP) — a current or former senior government official, judicial officer, military commander, or senior executive of a state-owned enterprise — enhanced due diligence is automatically required. See our guide on PEPs for professional services firms.

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Beneficial ownership verification — quick answers

The common threshold used in Australian AML/CTF practice is 25% or more ownership or control, though your own risk-based approach may set a lower threshold for higher-risk structures. Anyone who exercises effective control — regardless of formal ownership percentage — should generally be identified too.
Beneficial ownership must trace through to a natural person — you can't stop at a corporate layer. For structures with holding companies or nominee arrangements, keep tracing ownership and control up the chain until you reach the actual individuals who ultimately own or control the entity.
Often yes — trusts can layer beneficiaries, appointors, and trustees in ways a simple company structure doesn't. Discretionary trusts in particular require identifying the settlor, trustee(s), appointor, and either named beneficiaries or the class of beneficiaries, depending on the deed.