Beneficial ownership — the trickiest part
How to identify the natural persons who ultimately own or control a corporate or trust customer.
In short
A beneficial owner is an individual who ultimately owns 25% or more of the customer, directly or indirectly — OR who controls it, which carries no percentage at all and is defined separately in s 11 of the Act as the capacity to cast more than half the votes, hold more than half the issued share capital, control the composition of the board, or determine the outcome of decisions about financial and operating policies through practical influence. Someone with no shares can be a beneficial owner. For a simple Pty Ltd an ASIC extract usually settles it. For trusts, Rule 6-3 applies: collect the control structure and the identity of any settlor, appointor, guardian or protector, the trustees, and each beneficiary — or a class description where the nature of the trust means identifying each one is not possible. If you take all reasonable steps and still cannot establish a beneficial owner you are not automatically blocked: Rule 6-8(1) allows a body corporate, partnership or unincorporated association to fall back to the chief executive officer or equivalent, and in a real estate brokering matter Rule 6-33(2) and (3) deem the matter established where the customer will not cooperate. Both routes require you to record the steps, the difficulties, and — for Rule 6-33 — your consideration of whether a suspicious matter report is required.
A beneficial owner is the natural person who ultimately owns or controls a customer. The threshold under the AML/CTF Act 2006 (Cth) and the AML/CTF Rules 2025 is 25% or more ownership or control, directly or indirectly. Where no individual meets the 25% threshold, the Rules require you to identify an alternative individual — typically the senior managing official who effectively controls the customer.
For a simple Australian proprietary company, identification is usually quick. Pull the ASIC extract, identify shareholders holding 25% or more, verify those individuals.
For trusts and layered structures, it gets harder.
Trust → corporate trustee → directors → beneficial owners. A common pattern is a discretionary family trust whose trustee is a corporate trustee, itself a Pty Ltd owned by a holding company. To identify the beneficial owners, you trace the chain: who controls the trust (typically the appointor), who are the trustees, who controls the corporate trustee (directors and shareholders), and who ultimately owns the holding company. The beneficial owners are the natural persons at the end of that chain — and there can be more than one.
For unit trusts, unit holders with 25% or more are beneficial owners. For discretionary trusts, the appointor (or whoever has the power to remove the trustee) is generally treated as a controller, and beneficiaries who have actually received material distributions may also need to be identified.
When ownership is opaque. Running out of documents is not the end of the road, but the way out is procedural and it is evidenced. The statutory phrase is "all reasonable steps", and note that verification under s 28(3)(d) must use reliable and independent data — a statutory declaration from the customer about their own ownership is a collection artefact, not verification.
Where the customer is a body corporate, partnership or unincorporated association and you have taken all reasonable steps without being able to establish any beneficial owner, Rule 6-8(1) deems the s 28(2)(d) matter established if you have recorded the steps taken and the difficulties encountered and have collected — and verified to the extent appropriate to the customer's ML/TF risk — the identity of the chief executive officer (or equivalent). That fallback does not extend to trusts.
Where you are brokering a real estate sale and the block is the customer's own non-cooperation, Rule 6-33(2) (buyer) and 6-33(3) (seller) deem any s 28(2) matter established, provided you have taken all reasonable steps, recorded the steps and difficulties, and made a record of your consideration of whether a suspicious matter reporting obligation arises. Under Rule 9-4A that non-cooperation is a matter you must take into account in forming that view.
The records are conditions of the deeming, not housekeeping — without them the deeming does not operate and you are back on s 28(1).
ECDD triggers from beneficial ownership. Enhanced customer due diligence is required when:
- A beneficial owner is a foreign PEP
- A beneficial owner is from a FATF "Call for Action" jurisdiction (currently Iran, DPRK or Myanmar)
- The structure looks designed to obscure ownership (multiple layers, nominee shareholders, opaque foreign entities)
- You cannot satisfactorily identify all 25%-plus owners
Domestic or international-organisation PEP beneficial owners do not automatically trigger ECDD unless the customer is independently high-risk.
Many residential vendors and buyers are individuals. But every commercial transaction, every developer and every investment buyer raises beneficial-ownership questions that require tracing through corporate and trust structures.
What to do next. When taking on a corporate or trust customer, request the trust deed and ASIC extract before signing the agency agreement. Resolve the beneficial-owner chain before you start providing the designated service.
Frequently asked questions
- What is the beneficial ownership threshold under Australian AML law?
- 25% or more, but only on the ownership limb. Section 5 of the AML/CTF Act defines a beneficial owner as an individual who ultimately owns, directly or indirectly, 25% or more of the customer, OR who controls the customer directly or indirectly. Control has no threshold — s 11 defines it as the capacity to cast or control more than half the votes, holding more than half the issued share capital, the capacity to control the composition of the board, or the capacity to determine the outcome of decisions about financial and operating policies including through practical influence. The threshold sits in the Act; the Rules 2025 state no percentage at all.
- Who is the beneficial owner of a discretionary trust?
- Typically the appointor (or whoever has the power to remove the trustee), the trustees, and any beneficiaries who have actually received material distributions. For unit trusts, unit holders with 25% or more.
- What if I cannot identify the beneficial owners?
- You are not automatically blocked. Where the customer is a body corporate, partnership or unincorporated association, you have taken all reasonable steps and been unable to establish any beneficial owner, and you have recorded the steps taken and the difficulties encountered, Rule 6-8(1) lets you instead collect and — to the extent appropriate to the customer's ML/TF risk — verify the identity of the chief executive officer or equivalent. The matter is then deemed established. That fallback does not extend to trusts. Where you are brokering a real estate sale and the obstacle is the customer's own non-cooperation, Rule 6-33(2) and (3) deem the matter established on a recorded set of steps plus a recorded consideration of whether a suspicious matter report is required. The recording is a condition, not a formality.