AUSTRAC expects reporting entities, including AFS licensees where applicable, to identify and verify beneficial ownership when providing designated services to non-individual clients. This requires taking reasonable steps to identify individuals who ultimately own or control the customer, particularly for companies, trusts, and other complex structures.
Expanded Answer
AUSTRAC’s AML/CTF framework requires reporting entities to understand who ultimately owns or controls a customer when the customer is not an individual. This includes identifying beneficial owners of companies, trustees of trusts, and individuals who exercise control through ownership or influence. The obligation is risk-based, but minimum identification procedures must still be applied.
In practice, advisers must collect information on ownership structures and control arrangements, and verify it using reliable, independent sources where required. For higher-risk clients or complex structures, additional steps may be necessary to confirm the accuracy of ownership details. The process must be documented, including how beneficial owners were identified and any challenges encountered.
Regulatory scrutiny increases where firms rely on incomplete ownership information or fail to look through layered structures. AUSTRAC expects beneficial ownership identification to be integrated into onboarding and ongoing due diligence processes. Practical expectations are outlined in AML/CTF financial planners Australia and the Five AML questions you must be able to answer.
Why it matters
Failure to identify beneficial ownership increases exposure to financial crime risk and AUSTRAC enforcement action. It also undermines the effectiveness of customer due diligence and risk assessment processes.
Practical guidance
- Identify and document all individuals who ultimately own or control non-individual clients, including through layered structures
- Verify beneficial ownership information using reliable sources, applying enhanced steps for higher-risk clients
- Integrate beneficial ownership checks into onboarding and ongoing customer due diligence processes
Further reading
Why AML programs fail adviser audits