What is a beneficial owner, and what does the control test mean?

This page is the definition and the control test. The steps for running the check sit in the how-to linked below. AML here means anti-money laundering. This is general information, not legal advice. AUSTRAC’s page on determining ownership and control (updated 31 March 2026) points at sections 5 and 11 of the Act.

Two different ways onto the list

People collapse these into “anyone over 25%”. The Act uses two limbs. Either one is enough. A customer can have several beneficial owners, and sometimes none.

The control test for a company

AUSTRAC says section 11 treats a person as controlling a body corporate if any of these is true:

• Votes. They can cast, or control the casting of, more than 50% of the votes at a general meeting.
• Shares. They directly or indirectly hold more than 50% of the issued share capital that counts. Shares with no right beyond a share of profits or capital are treated differently. Read the exclusion before you rely on it.
• The board. They can control who sits on the board or governing body.
• Practical influence. They can determine the outcome of decisions about financial and operational policies, looking at how the company actually behaves, not only at rights someone could sue to enforce.

A 30% shareholder is a beneficial owner through the ownership limb, without needing any of those control tests. A 10% shareholder who can appoint and remove the board can be a beneficial owner through control, without owning 25%. A shareholder with 40% of the shares and 100% of the votes is a controller because of the votes, which is the pattern in AUSTRAC’s voting example. Owning nothing is compatible with control.

Trusts, partnerships, and other customers

For a person that is not a company, AUSTRAC points at section 11(2). Control is about the governing body — trustees, managers, a committee — or the same practical influence over financial and operational policy. A limited partner at 25% of the capital is on the list through ownership. The individual who owns the general partner that holds the votes is on the list through control, even when another partner has a large profit share and no vote. That is the shape of AUSTRAC’s limited-partnership example.

On a trust, ask who can direct distributions or change the trustee in practice, not only whose name is on a distribution minute. Collect the control structure. AUSTRAC’s customer-type guidance also points firms at settlors, appointors, guardians, and protectors when those roles exist. The label on the deed is a clue. The test is still ownership or control by an individual.

Follow the chain to a person

A company cannot be the beneficial owner you stop on. If Company A is owned by Company B, and Company B is owned by an individual, that individual is the one you identify. AUSTRAC’s overview uses a trust controlled by a company: you keep going until the individual who owns or controls that company. Stop only when you are at natural persons, or when a specific carve-out applies.

The sole director who brings the documents is often the person acting for the customer. That is a separate matter: identity plus authority. It does not make them the beneficial owner unless they also own 25% or more or control the entity. Record both roles if both are true. Do not record one and assume it covers the other.

When you do not identify owners behind an entity

AUSTRAC’s guide for bodies corporate, partnerships, and unincorporated associations says you need not identify beneficial owners where you have established on reasonable grounds that the customer is, or is controlled by, a listed public company or a government body, or that the customer owns such an entity. You are also taken to have dealt with whether those beneficial owners are politically exposed or sanctioned. You still identify any other beneficial owner who sits outside that carve-out. A private company beside a listed company in the same structure is still in scope.

If you cannot establish any beneficial owner after real effort, the same guide says you can still meet the matter where you took all reasonable steps, wrote down the steps and the difficulty, collected the identity of the chief executive or equivalent, and verified what the risk requires. That is a fallback, not the first move. “The accountant didn’t know” is not the record.

What you do with the names

Naming the individual is not the end of initial CDD. You establish their identity on reasonable grounds, and you establish whether they are a politically exposed person or designated for targeted financial sanctions. How deep you verify depends on the risk. The procedure — extracts, structure charts, and the check itself — is the how to perform beneficial ownership checks guide. Use that page for the workflow. Use this page when someone asks what the 25% figure means and what “control” adds.

Where FreeAML fits

Once the program says which individuals must be verified, the firm suite is A$0 and the check is client-pays. FreeAML emails that person a link. The firm does not pay a seat to store the result. Current prices are on FreeAML pricing. The product does not decide the control test. If the chart is unclear, get advice before you email the wrong person or skip the right one. Obligations for newly regulated firms are on Tranche 2.

Frequently Asked Questions