Beneficial Ownership Obligations for TCSPs Under Tranche 2
AMLify explains what TCSPs must verify, record and re-check about beneficial owners now that Tranche 2 AML/CTF obligations are in force.
Trust and company service providers must identify, verify and keep verifying the beneficial owners of every structure they administer — a standing obligation, not a one-off onboarding check. Under the AML/CTF Act 2006, AUSTRAC treats this as one of the highest-risk gaps in the TCSP sector, because trusts and companies are a common vehicle for separating legal ownership from real control.
Why do TCSPs face tougher beneficial ownership scrutiny?
TCSPs create and administer the very structures — trusts, companies, nominee arrangements — that can be used to obscure who actually controls an asset. AUSTRAC's guidance singles out layered trust structures and nominee directors or shareholders as elevated ML/TF risk indicators. Verifying only the visible director or trustee, without tracing through to the natural person who ultimately owns or controls the structure, does not satisfy the CDD obligation — even if every form on file looks complete.
What information must a TCSP collect on beneficial owners?
For each beneficial owner — generally anyone with 25% or more ownership or effective control — a TCSP must collect and verify: 1. Full name, date of birth and residential address 2. The nature and extent of their ownership or control, including indirect holdings through other entities 3. Verification against a reliable, independent source — not a self-declaration from the client 4. PEP and sanctions screening results for every identified beneficial owner For trusts, this extends to the trustee, appointor, and any beneficiary with a vested or ascertainable interest.
How often must beneficial ownership records be reviewed?
Beneficial ownership is not a set-and-forget field. Your AML/CTF programme must set a review cycle based on risk rating — commonly annual for standard-risk structures, more frequent for higher-risk or offshore-linked trusts — and re-verification must also trigger immediately on a known event such as a change of trustee, share transfer or restructure. AUSTRAC's early TCSP reviews have specifically checked whether these fields were ever updated after onboarding.
What should a TCSP do when ownership or control changes?
A change in beneficial ownership or control should trigger fresh identity verification, re-run PEP and sanctions screening for the incoming party, a re-assessment of the structure's ML/TF risk rating, and a timestamped record of the change and evidence relied on. See AMLify for trust and company service providers for how this runs inside a single client workflow rather than a manual re-onboarding exercise.
Key Takeaways
- Beneficial ownership verification is ongoing, not a one-time onboarding task
- Trace through to the natural person — verifying only a nominee director or trustee is not enough
- Collect ownership/control details, independent verification and PEP/sanctions screening for every beneficial owner, including trust beneficiaries with a vested interest
- Set a risk-based review cycle and trigger re-verification immediately on any ownership change
- AMLify keeps beneficial ownership records current automatically — see /pricing for a 14-day free trial
Frequently Asked Questions
Q: What counts as a beneficial owner for AML/CTF purposes?
A beneficial owner is any natural person who ultimately owns, controls or benefits from a company, trust or other legal structure — generally anyone holding 25% or more ownership or effective control, directly or indirectly. For trusts, this includes trustees, appointors and beneficiaries with a vested or ascertainable interest.
Q: What happens if beneficial ownership can't be fully verified?
If a TCSP cannot verify a beneficial owner to the required standard, it must not provide the designated service, and in some cases must consider a suspicious matter report. AUSTRAC does not accept an incomplete beneficial ownership picture as a basis for proceeding with the relationship.
Q: How long must beneficial ownership records be kept?
Beneficial ownership records, along with verification evidence and any screening results, must be retained for at least seven years after the relationship ends, in a format that is searchable and available for AUSTRAC review.
This is general information only and not a substitute for legal advice.