A beneficial owner is not whoever signed the paperwork. It is the person who actually owns or controls your client, once you strip out the companies and trusts sitting in between.
You keep peeling back layers until you reach a human being. That person is the point.
I’ll be upfront: this is one of the few parts of customer due diligence I think genuinely earns its place. A lot of the rest can feel like paperwork for its own sake. This part doesn’t, because it maps onto exactly how money gets hidden.
A house gets bought by a company. The company is owned by a trust. The trust answers to someone whose name is nowhere on the contract.
Beneficial ownership is just the rule that says: find that person anyway.
There are two ways someone becomes a beneficial owner, and people always remember the first and forget the second.
The first is ownership: 25% or more of the client, directly or through other entities. That one’s easy. It’s a number, you check it.
The second is control, and this is the one that trips people up. You can own nothing at all and still be a beneficial owner, as long as you call the shots: voting power, the power to put people in charge or remove them, plain influence over how decisions actually get made. Whereas ownership is a number, control is a judgment. And judgments are where people get lazy.
Figure 1. The two routes to beneficial ownership, and what to do when neither is clear.
Then there’s the tracing, which is the part nobody enjoys. A company owned by a company owned by a trust, and you follow it up, link by link, until you reach the actual people at the top.
It’s tedious, and there’s no shortcut. But the tedium is sort of the tell. A structure that takes all afternoon to untangle is usually a structure built so that nobody would bother.
Trusts are where this gets genuinely annoying. A discretionary trust can look like nobody owns anything, which is exactly why people who want to stay hidden use them.
So you don’t stop at the trustee. You go to the beneficiaries, the settlor who set it up, the appointor who can hire and fire the trustee. Any of them could be the person actually standing behind it.
Figure 2. Who to identify in a company, a trust and a partnership.
Then the case everyone asks about. No one owns 25%, and no one obviously controls it either.
You don’t get to write ‘none’ and move on. You take reasonable steps to find an alternative individual, and if it comes to that, the senior managing official, the person actually running the place.
‘We couldn’t find anyone’ is not an answer the rule accepts.
None of this needs to be expensive, by the way. Ask the client how they’re owned and controlled. Get the documents: an ASIC extract, the trust deed, the partnership agreement. Trace it to the individuals, verify them, write down what you did.
If I had to pick the one place this matters most, it’s real estate. Property is where laundered money goes to look respectable, sitting quietly behind a clean company.
Two things people get wrong. Control is a separate test from the 25% number, so a small shareholder who runs the place is still a beneficial owner. And when no one owns enough and no one obviously controls, you don’t stop there, you go on to the senior managing official.
If you’re getting ready for 1 July 2026, here’s where I’d start.
For every client that isn’t a person, ask who owns and controls it before anything else.
Treat ownership and control as two separate questions, so the quiet one with real control doesn’t slip past the 25% screen.
And when there’s a trust or a stack of holding companies, give it the time. Don’t stop at the first company you see.
The regulatory detail
Definition and source
A beneficial owner of a customer that is not an individual, such as a company, trust or partnership, is an individual who ultimately owns, directly or indirectly, 25% or more of the customer, or who controls the customer, directly or indirectly (Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) section 10A; AML/CTF Rules 2025 section 2-1; control is defined in Act section 11). The obligation to identify beneficial owners sits within initial customer due diligence (Act section 28) and is kept current through ongoing CDD.
Ownership: the 25% test
“Owns” means holding 25% or more of the customer. This can be direct, such as a shareholding, or indirect, such as ownership held through another company, a bank or a broker. Where ownership runs through intermediate entities, the chain is followed until the individual owners at the top are identified.
Control (Act section 11)
Control is the capacity to influence or direct the decision-making of another person, and it does not require ownership. For a body corporate, an individual controls the company if any limb of Act section 11(1) applies, including the capacity to cast, or control the casting of, more than 50% of the votes at a general meeting. For a person that is not a company, such as a partnership or trust, control under Act section 11(2) is assessed on two bases: board control, the capacity to control the composition of a governing body such as the trustees, managers or a committee; and practical influence, the capacity to determine the outcome of decisions about financial and operating policies, taking account of practical influence and patterns of behaviour rather than only enforceable rights.
Corporate customers
For a corporate customer, identify the individuals who own 25% or more of the shares, or who hold the relevant voting power or other control, tracing through any holding companies to the ultimate individuals.
Trust customers
For a trust, identification extends to the trustees; the beneficiaries, including income and capital beneficiaries and named beneficiaries; the settlor; and the appointor, together with any individual who has the power to remove or appoint a trustee, control the trust property, or change the trust property or beneficiaries. For a discretionary trust, this includes individuals who have received a distribution, are likely to receive one, or exercise significant influence over the trust. A settlor who acted only in a professional advisory capacity, with no other ongoing connection to the trust, or whose contribution falls below the applicable materiality threshold, may be excluded.
If no beneficial owner can be identified
Where no single individual owns 25% or more and no single individual controls the customer, the reporting entity must take reasonable steps to identify and verify an alternative individual, which in practice means the senior managing official of the customer. “Reasonable” means what is practical, necessary and appropriate for the assessed ML/TF risk. A disclosure certificate may be used where the information cannot otherwise be obtained.
Verification and records
Beneficial ownership information is verified using reliable and independent documentation or data, such as an ASIC company extract or a trust deed. The steps taken to trace and verify ownership and control are recorded, and AML/CTF records are generally kept for 7 years.
A separate register reform
A separate reform will establish a beneficial ownership register administered through ASIC, with phased access for regulators, enforcement agencies and reporting entities. That register is distinct from the customer due diligence obligation described here, although both are aimed at the same problem of hidden ownership.
FATF
Beneficial ownership transparency reflects FATF Recommendation 24 (transparency of legal persons) and Recommendation 25 (transparency of legal arrangements), and identifying beneficial owners forms part of the customer due diligence measures in FATF Recommendation 10.
Frequently asked questions
What does “beneficial owner” actually mean?
The individual who ultimately owns or controls a customer that is not itself an individual. Ownership means holding 25% or more of the customer. Control means being able to direct the customer’s decisions, with or without any ownership.
Why 25%?
It is the ownership threshold set in the AML/CTF framework for treating an individual as a beneficial owner. It is a floor, not the whole test, since an individual who holds less than 25% can still be a beneficial owner through control.
Can someone be a beneficial owner without owning anything?
Yes. Control is a separate basis from ownership. An individual who can cast or control most of the votes, appoint or remove the people in charge, or otherwise direct decisions is a beneficial owner even with no shareholding.
What if no one owns 25% and no one clearly controls the customer?
You take reasonable steps to identify an alternative individual, and ultimately the senior managing official. You cannot record that no beneficial owner exists and leave it there.
Do trusts make this harder?
Often, yes. A discretionary trust can appear to have no owner at all, so identification covers the trustee, the beneficiaries, the settlor and the appointor, along with anyone who can control the trust or change its beneficiaries.
Homepedia builds HP-KYC, a Tranche 2 customer due diligence tool for real estate agencies and law firms. [link to homepedia.com.au product page]
Sources
- AUSTRAC, Determining ownership and control structures (Reform)
- AUSTRAC, Beneficial owner (glossary)
- AUSTRAC, Overview of customer due diligence (Reform)
- Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth)
- AML/CTF Rules 2025 (Cth)
- AUSTRAC, Future Law Compilation of the AML/CTF Act
- The Treasury, Beneficial ownership register reform (policy specifications)
- FATF Recommendations (Recommendation 24, legal persons; Recommendation 25, legal arrangements; Recommendation 10, CDD)
- Law Society of NSW, AML/CTF Hub
- Home Affairs, Overview of the AML/CTF Amendment Act
General information about Australian AML/CTF obligations, current as of June 2026. This is not legal advice.
