Beneficial Owner: Key Highlights at a Glance
- What it is: The real person who ultimately owns or controls a customer that is not an individual.
- Key test: Owns 25 percent or more, or controls the customer directly or indirectly.
- Why it matters: Criminals often hide behind companies and trusts. Beneficial ownership checks reduce that risk.
What Is a Beneficial Owner?
AUSTRAC defines a beneficial owner of a person other than an individual as an individual who ultimately owns, directly or indirectly, 25 percent or more of the person, or controls the person directly or indirectly.
AUSTRAC’s reform guidance also explains that ownership can be direct or indirect, and that you should follow chains of ownership until you reach the individual beneficial owner. It also clarifies that control can exist without ownership, including through practical influence and established patterns of behaviour.
Why beneficial ownership is a core AML CTF control
Beneficial ownership is one of the most important tools for preventing misuse of corporate vehicles. If you only deal with the signatory or front company, you may never identify the actual controller, the ultimate beneficiary, or the person directing the arrangement.
AUSTRAC explicitly states that understanding who ultimately has control plays an important role in detecting, disrupting and preventing money laundering and terrorism financing, and it protects businesses from exploitation.
For Tranche 2 sectors, this is particularly relevant because many Tranche 2 services intersect with high value transactions, complex structures, and cross border dealings. The AML CTF Amendment Act 2024 expands the regime to those higher risk services, which signals that beneficial ownership will be a key supervisory focus.
What beneficial ownership looks like in real client files
Example 1: Company customer in a property purchase
A company buys property. The director signs documents. The true beneficial owner is an overseas individual who owns the company through a chain of entities. Your beneficial ownership obligation is to identify that individual, not just the director.
Example 2: Trust customer in professional services
A trust seeks services. The trustee is a company. Control sits with an individual who appoints the trustee directors and directs decisions. Even if shareholdings are small, control can still apply.
Example 3: Partnership with a hidden controller
A partnership is the customer. One person funds the venture and effectively directs decisions, despite holding no formal ownership. AUSTRAC’s concept of control includes practical influence, so this must be assessed carefully.
How to identify beneficial owners
How to identify beneficial owners
A practical, defensible method usually follows five steps.
Step 1: Identify whether the customer is an individual
Beneficial ownership checks are most relevant for customers that are not individuals, such as companies, trusts, partnerships, and other structures.
Step 2: Collect an ownership and control map
Ask for a structure chart that shows all entities in the chain and the natural persons behind them, including percentages where possible.
Step 3: Apply the 25 percent ownership test
AUSTRAC’s guidance uses 25 percent as the ownership threshold, direct or indirect.
Step 4: Apply the control test
Assess who controls decisions. Control can be formal through voting rights, but it can also exist through practical influence. AUSTRAC
Step 5: Follow the chain until you reach individuals
AUSTRAC’s reform guidance is clear that you must follow the chain of ownership until you can determine the individual beneficial owners. AUSTRAC
Best practice for Tranche 2 businesses
- Build beneficial ownership checks into onboarding, not at the last minute before a transaction completes.
- Define evidence standards. Decide what documents you will accept to support the ownership chart.
- Use a risk-based approach. Where risk is higher, require stronger corroboration and ask better questions.
- Record your reasoning. If you decide someone is a beneficial owner due to control rather than ownership percentage, write the rationale clearly.
- Refresh beneficial ownership when triggers arise, such as changes in directors, new jurisdictions, or unusual payment patterns.
Key Challenges in Identifying Beneficial Ownership
Complex layers and overseas entities
This is common in high value matters. The answer is to insist on a clear ownership map and follow the chain to individuals.
Nominees and front persons
Nominee arrangements can obscure control. Treat unexplained nominees as higher risk and escalate.
Confusing signatories with beneficial owners
A signatory can be a staff member or nominee. A beneficial owner is the individual who ultimately owns or controls.
Time pressure
This is operational, not legal. Solve it by making beneficial ownership a standard intake step, supported by templates.
Concluding remarks
“Bookmakers sit at a natural convergence point for cash, speed and anonymity. AUSTRAC’s focus reflects the reality that wagering platforms can be misused as value transfer mechanisms if risk controls are not actively applied.”
