For an individual customer, customer due diligence is straightforward — you verify a name, date of birth, and address against electronic data. For a non-individual customer (a company, trust, partnership, or association), you must identify the natural persons who ultimately own or control the entity. This is beneficial ownership, and it's the part of Tranche 2 that consistently underwhelms first-time reporting entities.
Who counts as a beneficial owner
Under the AML/CTF Rules, a beneficial owner is any individual who ultimately owns 25% or more of an entity, or who exercises effective control over it. Effective control captures arrangements that don't show up in the share register: shadow directors, beneficiary classes in discretionary trusts, and contractual control over decision-making.
The common structures and how to handle them
- Proprietary company with two individual shareholders — verify the shareholders directly.
- Holding company structure — unwrap until you reach natural persons holding 25%+ at the top.
- Discretionary trust — identify the trustee, the appointor, and any individual beneficiary who has received material distributions.
- Unit trust — verify unitholders with 25%+ holdings.
- Foreign-incorporated entities — verify the foreign register, then unwrap as above.
What good platforms automate
Specialist CDD providers like First AML and StackGo automate the unwrapping by integrating with ASIC, foreign company registers, and structured trust deed parsing. The work that previously took a paralegal half a day on a complex client now takes 10 minutes of guided workflow. For SMEs whose corporate clients are mostly Australian Pty Ltds with two directors, the full-suite platforms handle it natively.