Beneficial Ownership. Know Who You're Dealing With

Your customer's a company. Nice office, professional directors, clean financial statements. You think you know who you're dealing with.

But do you know who really owns it? Because that's what beneficial ownership is about.

What Is a Beneficial Owner?

A beneficial owner is the real person (or people) who ultimately own or control an entity — and who benefit from it.

Not the nominee shareholder. Not the trust. Not the shell company in the Cayman Islands. The actual human being at the end of the ownership chain.

AUSTRAC's definition: An individual who ultimately owns or controls a customer, or on whose behalf a transaction is being conducted.

Why This Matters

Criminals don't buy property in their own name. They don't open bank accounts as "John Doe, Drug Trafficker." They use layers:

• Trust A owns Company B
• Company B is controlled by Company C
• Company C has a nominee director in Singapore
• The actual criminal? Never appears on any paperwork

If you're only looking at the legal owner (Company B), you're missing the whole story. And you're probably facilitating money laundering without realizing it.

The 25% Rule (Usually)

AUSTRAC guidance says beneficial owners typically include anyone who owns or controls 25% or more of a company or trust.

So if four people each own 25% of a company, you identify all four. If one person owns 60%, you identify them. If ownership is spread across 20 small shareholders but one person controls voting rights? You identify the controller.

But here's the catch: 25% isn't a magic cutoff. If you've got reasons to believe someone with 15% ownership is actually calling the shots (maybe they're the only one with signing authority), you identify them too.

More Than Just Ownership

Beneficial ownership isn't just about who owns shares. It's about who controls the entity:

Ownership
Who holds shares, units in a trust, or other ownership interests?

Control
Who appoints directors? Who has veto rights over major decisions? Who signs on bank accounts? Who can fire the CEO?

Benefit
Who gets the profits? Who benefits when assets are sold? Who receives distributions from a trust?

A beneficial owner might tick one, two, or all three of these boxes. Your job is to figure out who ticks any of them.

Different Entity Types, Different Complexity

Companies (Pty Ltd, Ltd)
Usually straightforward. Check ASIC records for shareholders. Anyone with 25%+ is a beneficial owner. Also identify anyone with significant control (like a managing director who effectively runs the company).

Trusts
Way more complex. You need to identify:

• Trustees (who control the trust)
• Settlors (who set up the trust)
• Appointors (who can replace trustees)
• Beneficiaries (who benefit from the trust)

A discretionary trust? The trustee has total control over distributions. They're a beneficial owner. Named beneficiaries? They might be beneficial owners. The appointor who can replace the trustee? They've got ultimate control — definitely a beneficial owner.

Partnerships
Identify all partners. In most partnerships, each partner has significant control, so they're all beneficial owners.

Super complicated structures
Trust owns Company A. Company A is trustee of another trust. That trust owns shares in Company B. Company B is your customer.

You trace it all the way back until you hit actual human beings. Yes, it's painful. No, you can't skip it.

Red Flags: Dig Deeper

1. Nominee directors can't answer basics

"Who owns this company?" "Uh, I'd have to check."

Real owners know.

2. Bearer shares (offshore)

Whoever holds the certificate owns the company.

No public records. Alarm bells.

3. Multiple layers, no business reason

Why does a Sydney cafe need a BVI company and Panamanian trust?

No legitimate tax reason? Probably hiding ownership.

4. Ownership changed last week

Company owned by Person A for 10 years.

Transferred to Person B a week before they're your customer.

Why? What's Person A hiding?

5. Offshore secrecy jurisdictions

BVI, Seychelles, Panama, Bahamas.

Not automatically suspicious. But commonly used to hide ownership.

Enhanced due diligence required.

How to Verify Beneficial Ownership

Step 1: Get documents

• Company extract (ASIC or equivalent)
• Trust deed or partnership agreement
• Shareholder register
• Organizational chart
• Customer declarations on ownership and control

Step 2: Trace the ownership chain

Shareholders are companies or trusts?

Don't stop. Trace those entities' ownership until you reach individuals.

Step 3: Identify 25%+ ownership or control

Who are the humans at the top?

Step 4: Verify their identity

Beneficial owners get full identity checks.

Government ID. Address verification. Everything.

Step 5: Screen them

PEP screening. Sanctions. Adverse media.

Corporate structure doesn't mean you skip checks.

Step 6: Document everything

Who you identified. What documents. How you verified.

AUSTRAC will want to see this.

When You Can't Identify Them

Sometimes you hit a wall.

Customer won't provide docs. Structure's too complex. Jurisdiction has no public records.

AUSTRAC expects:

1. Take reasonable measures

Not expected to hire private investigators.

But you must ask for documents, search public registries, make genuine efforts.

2. Escalate to senior management

Can't identify beneficial owners? Customer is high-risk.

Senior management approves whether to onboard.

3. Apply enhanced due diligence

Increased monitoring. More frequent reviews. Source of funds verification.

Treat as higher risk because you don't know who they really are.

4. Consider refusing the business

Customer actively refuses disclosure?

Structure deliberately hides ownership?

You can walk away. Probably should.

Ongoing Monitoring

Beneficial ownership isn't one-and-done. It changes:

• Shares sold
• New partners join
• Trustees replaced
• Control structures shift

Your AML program specifies re-verification frequency.

Low-risk customers? When you review the relationship.

High-risk? Annually or more.

Tranche 2: Your New Reality

From July 2026, lawyers, accountants, real estate agents become reporting entities.

Beneficial ownership becomes your problem.

Real estate agents:

Corporate buyer offering $3 million for an apartment?

You need the actual beneficial owner. Not just the nominee.

Accountants:

Client wants a trust structure?

Identify and verify every beneficial owner first.

Lawyers:

Managing trust account for corporate client?

Need beneficial ownership records for every entity.

Not optional. AUSTRAC requirement. Million-dollar penalties for getting it wrong.

Technology Helps

Manual verification is slow and error-prone. Especially with complex structures.

Platforms like ARCaml can:

• Query ASIC automatically
• Map ownership structures visually
• Flag ownership changes
• Verify beneficial owner identity
• Screen against PEP and sanctions lists
• Store evidence for AUSTRAC audits

But tech can't replace judgment.

You still ask: Does this structure make sense? Why so complicated? Is the customer evasive?

How It Goes Wrong

Sydney real estate agency (pre-Tranche 2) sells $4.5 million apartment to "Pacific Holdings Pty Ltd."

Director listed in Malaysia. Agent never asks about beneficial owner.

Turns out:

• Pacific Holdings owned by Vanuatu trust
• Trust controlled by organized crime figure
• Under investigation for drug trafficking
• $4.5 million? Proceeds of crime

If the agent identified the beneficial owner? Would've found the criminal link. Could've refused the sale or filed SMR.

Instead? Unwittingly facilitated money laundering.

From July 2026, that same agent must identify beneficial owners. Not doing it? Breach of AML/CTF Act.

The Bottom Line

Beneficial ownership is hard. Time-consuming. Requires digging through trust deeds, corporate registers, asking uncomfortable questions.

But it's the difference between knowing who you're dealing with and being used for money laundering.

AUSTRAC's clear: Can't identify who benefits? Don't do business with them. Simple.

Entering AUSTRAC regime through Tranche 2? Get your beneficial ownership processes sorted now.

Come July 2026, there's no grace period. No learning curve.

You're expected to get it right from day one.