How to Perform Beneficial Ownership Checks in Australia
AUSTRAC requires verification of beneficial owners (UBOs) for all company and trust customers. This complete guide covers the 25% threshold rule, ASIC lookups, complex ownership structures, manual vs automated verification, and practical examples.
What is a Beneficial Owner (UBO)?
A beneficial owner is the actual human being who ultimately owns or controls 25% or more of a company or trust. Even if ownership is through other companies, trusts, or nominees, you must trace through to identify the real people at the top.
Key Point: You cannot accept "XYZ Company owns it" as an answer. You must find out who owns XYZ Company.
Why UBO Verification Matters
Under AUSTRAC Tranche 2 (starting July 1, 2026), you cannot accept a company or trust as a customer without identifying and verifying ALL beneficial owners. This prevents:
- Money launderers hiding behind shell companies
- Sanctioned individuals operating through nominees
- Tax evasion through complex ownership chains
- Criminal proceeds flowing through corporate structures
⚠️ Legal Requirement
Failing to verify beneficial owners is a serious AML/CTF breach. Penalties include fines up to $27 million and criminal prosecution.
The 25% Threshold Rule
A beneficial owner is anyone who owns or controls 25% or more through:
Direct Ownership
Owns 25%+ shares directly
Indirect Ownership
Owns 25%+ through other entities
Effective Control
Can appoint/remove directors
Trust Control
Settlor or trustee of a trust
Step-by-Step UBO Verification Process
Obtain Entity Documents
- ASIC company extract ($9 via asic.gov.au)
- Share register from company secretary
- Trust deed (for trusts)
- Ownership structure diagram (if complex)
Identify All Shareholders/Controllers
- List every person/entity with 25%+ ownership
- Include indirect ownership (e.g., through other companies)
- Identify trustees and settlors (for trusts)
- Document the ownership structure
Trace Corporate Ownership
- If shareholder is a company → get THAT company's ASIC extract
- If shareholder is a trust → get trust deed
- Keep tracing until you reach natural persons (humans)
- Calculate ultimate ownership percentages
Verify Each Beneficial Owner
- Collect photo ID from each UBO
- Biometric liveness check (selfie matching ID)
- AML watchlist screening (sanctions, PEPs)
- Create individual CDD report for each UBO
Common Scenarios Explained
Simple Company (2 Shareholders)
ABC Pty Ltd → John (60%) + Sarah (40%)
✓ UBOs: John and Sarah (both ≥25%)
Company Owned by Company
ABC Pty Ltd → 100% owned by XYZ Holdings
XYZ Holdings → John (50%), Sarah (30%), Tom (20%)
✓ UBOs: John (50%) and Sarah (30%)
(Tom is <25% so NOT a UBO)
No One Above 25%
ABC Pty Ltd → 5 shareholders at 20% each
⚠️ Verify senior managing official (CEO/MD)
Manual vs Automated UBO Verification
❌ Manual (30-90 min)
- 1. Buy ASIC extract ($9)
- 2. Read shareholdings manually
- 3. Identify shareholders ≥25%
- 4. If corporate shareholder, buy THAT extract
- 5. Keep tracing to humans
- 6. Request IDs from each UBO
- 7. Manually verify documents
- 8. Screen watchlists manually
✓ FreeAML (60 sec)
- Auto ASIC extract
- AI ownership parsing
- Auto-detect all UBOs
- Trace corporate layers
- Send verification links
- Biometric verification
- Auto AML screening
- Combined report
Automated UBO Verification
FreeAML automatically detects all beneficial owners and sends verification links. Complete AUSTRAC-compliant entity + UBO report in 60 seconds.
Entity + 1 UBO
$50
Entity + 3 UBOs
$80
Frequently Asked Questions
What if no one owns 25% or more?
Verify the senior managing official (CEO, Managing Director) instead.
Do I need to re-verify UBOs every transaction?
No. Once verified, UBO records remain valid for 2-3 years unless ownership changes.
What if the UBO lives overseas?
Accept international passports. Biometric verification and AML screening still required.
Can I just verify directors instead?
No. Directors ≠ beneficial owners. You must verify actual owners (25%+ shareholders).