What is a beneficial owner?
A beneficial owner is an individual who owns 25% or more of a client entity, or controls it. The Australian legal meaning, and what Tranche 2 firms must do.
A beneficial owner is the individual behind a client that is not an individual. Under Australia's AML/CTF Act, it is anyone who ultimately owns 25% or more of a company, trust, partnership or other entity, directly or indirectly, or who controls it. One client can have several beneficial owners, or none. Before you provide a designated service, you must establish who they are.
This page is for accountants and the other businesses regulated by the Australian Transaction Reports and Analysis Centre (AUSTRAC) since 1 July 2026. In the industry the term is often written ultimate beneficial owner (UBO). The Act says beneficial owner, and the word "ultimately" is already in its definition.
What the law says a beneficial owner is
Section 5 of the AML/CTF Act says a beneficial owner of a person other than an individual is an individual who:
- ultimately owns, directly or indirectly, 25% or more of the person; or
- controls the person, directly or indirectly.
Three things follow from those words. A beneficial owner is always a natural person: a company or a trust is never one itself. Exactly 25% counts. And either test is enough on its own, so the owner and the controller can be different people, and both are beneficial owners.
What control means
Control has its own definition, in section 11 of the Act. It is wider than holding shares. As AUSTRAC puts it, you don't need to own another person to have control.
| The client is | An individual controls it if they can |
|---|---|
| A company or other body corporate | Cast, or control the casting of, more than half the votes at a general meeting; hold, directly or indirectly, more than half the issued share capital; control who sits on the board; or determine the outcome of decisions about its financial and operating policies |
| A trust, partnership or other entity | Control who sits on its board or governing body, such as its trustees; or determine the outcome of decisions about its financial and operating policies |
For the last test in each row, the Act counts the practical influence a person can exert, not only the rights they could enforce, and any practice or pattern of behaviour, even one that breaches an agreement or a trust.
Follow the chain
Ownership can be direct, through shares, or indirect, through another company or an intermediary such as a nominee. AUSTRAC says you must follow the chain of ownership until you reach the individuals. In its own example, a bank's customer is wholly owned by one company, which is owned by another, and an individual owns 76% of that third company. She is the customer's beneficial owner, even though her name is on none of the customer's own records.
Who it is for companies, trusts and partnerships
The test is the same for every kind of client. Where it lands differs, and so does the minimum you must collect under the AML/CTF Rules 2025.
| Client | Who can be a beneficial owner | What the Rules say you collect |
|---|---|---|
| Company | Any individual with 25% or more, held directly or through other entities, and anyone who controls the company | Its ownership and control structure, including how its shares are distributed and their kinds, plus the names and director identification numbers of its directors (Rules s 6-2) |
| Trust | AUSTRAC lists individual trustees, or the individuals behind a corporate trustee; settlors, appointors, guardians and protectors; and any other individual with control over the trust, which for a bare trust typically includes the beneficiaries | Its control structure and the identity of any settlor, appointor, guardian or protector (Rules s 6-3(5)), plus each beneficiary, or each class of beneficiary where they can't be named (s 6-3(3)) |
| Partnership | Any partner with 25% or more, and anyone who controls the partnership | Its ownership and control structure, checked against the partnership agreement (Rules s 6-2) |
AUSTRAC's partnership example shows both tests at work. A limited partner with 25% of the capital is a beneficial owner. One with 20% and no voting rights is not. The sole shareholder of the company that is general partner, and holds all the votes, is a beneficial owner through control.
When there is no beneficial owner, or you can't find one
Some clients have no individual who meets either test. For a company, partnership or unincorporated association with no beneficial owners, you identify its chief executive officer or equivalent instead (Rules s 6-8(2) and (3)). If you have taken all reasonable steps and still can't identify them, you record the steps and the difficulties, then collect and verify the chief executive's identity as the risk requires (s 6-8(1)). The Rules give this fallback to companies, partnerships and associations, not to trusts.
When you don't need to look through
You don't need to identify the beneficial owners of a client that is a listed public company subject to disclosure rules that make its owners transparent, a government body, or a client controlled by either (Rules s 6-7). Where one of those owns only part of your client, you look through every other part of the ownership. For low-risk clients where simplified due diligence applies, the same goes for a client that is, or is controlled by, a business licensed by a prudential, insurance or investor protection regulator, or a strata or community title body corporate (s 6-18). You still identify and screen the client itself and anyone acting for it.
What a Tranche 2 business must do
- Before you start. You must not begin a designated service until you have established, on reasonable grounds, the identity of any beneficial owners of a client that is not an individual (Act s 28(1) and (2)(d)).
- Collect the structure. At a minimum, collect information on how the client is owned and controlled (Rules ss 6-2(3), 6-3(5)). AUSTRAC says you can usually ask the client, but may need your own research: current and historical Australian Securities and Investments Commission (ASIC) extracts, the constitution, trust deeds and partnership agreements.
- Verify each beneficial owner. AUSTRAC says you verify a beneficial owner's identity the same way as an individual client's, to the degree the client's risk calls for. For a low-risk client, the Rules let you rely on the information you collected without verifying it, if enhanced due diligence doesn't apply and nothing gives you reason to doubt it (s 6-17).
- Screen them. Establish whether each beneficial owner is a politically exposed person or designated for targeted financial sanctions (Act s 28(2)(e)). A foreign PEP among the owners triggers enhanced customer due diligence (s 32). See what a politically exposed person is.
- Keep it current. Review and, where appropriate, update and reverify know your customer (KYC) information at a frequency that suits the client's risk, and whenever you doubt it (Act s 30(2)(c)). A change of owners is the obvious moment.
- Keep the record. Hold the records that show how you met these obligations for 7 years after the business relationship ends (Act s 111).
One case surprises accountants. If the service is creating a company for a client, the Act makes the new company's beneficial owners and directors your customers too. For a new express trust, the trustee, settlor and beneficiaries are (table 6, item 6).
The step-by-step for these clients is in CDD for company and trust clients. Collecting ownership in practice is covered in getting UBO right under Tranche 2.
Key point
Under Australia's AML/CTF Act, a beneficial owner is an individual who ultimately owns 25% or more of a customer, directly or indirectly, or who controls it.
Where accountants get it wrong
Shareholder, director, trust beneficiary: when each is a beneficial owner
| Role | A beneficial owner when | What you record anyway |
|---|---|---|
| Shareholder | An individual with 25% or more, or control. A company shareholder never is: look through it. A name on the register may be a nominee | The ownership and control structure, including how shares are distributed (Rules s 6-2(3)) |
| Director | Only if they also own 25% or more or control the company. Test each separately | Each director’s name and director identification number, for every company client (s 6-2(2)(i)) |
| Trust beneficiary | Not automatically. For a bare trust, AUSTRAC says the beneficiaries typically count | Each beneficiary, or each class where they can’t be named (s 6-3(3)) |
| Trustee, settlor, appointor, guardian or protector | May be, through control, such as an appointor who can replace the trustee | The control structure and the identity of each settlor, appointor, guardian or protector (s 6-3(5)) |
Sources: Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (ss 5, 11); Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (ss 6-2, 6-3); AUSTRAC, Initial CDD for trust; AUSTRAC, Determining ownership and control structures Reviewed
"The shareholders are the beneficial owners"
Not always. A shareholder under 25% with no control is not one. A shareholder that is a company is never one: you look through it. And a name on the register may be a nominee holding for someone else. The beneficial owner can be a person who appears on none of the client's registers.
"The directors are the beneficial owners"
Directors are officeholders. The Rules require their names, and director identification numbers, for every company client anyway (s 6-2(2)(i)). A director is also a beneficial owner only if they own 25% or more or control the company. In a small private company the director often is both, but test each separately.
"The trust's beneficiaries are its beneficial owners"
The words sound alike, but the Act deals with them separately. Beneficiaries are the people a trust receives your service on behalf of, and you identify each one, or each class (Rules s 6-3(3)). The beneficial owners are the people who control the trust, such as the trustee and the appointor. For a bare trust, AUSTRAC says the beneficiaries typically count as well. For an ordinary family trust you usually collect both lists.
Key point
A trust beneficiary is not automatically a beneficial owner. AUSTRAC lists trustees, settlors, appointors, guardians and protectors as the people who may be a trust's beneficial owners.
"Under 25% means not a beneficial owner"
Only for the ownership test. Control catches people with no shares at all: an appointor who can replace the trustee, or a person whose decisions the board follows in practice. AUSTRAC lists both board control and practical influence.
A worked example
Worked example: who owns Harbour Joinery
| Who | Their position in Harbour | Beneficial owner? |
|---|---|---|
| Ben | Director, 20% of the shares, no control | No. Recorded as a director |
| Priya | Director, 20% of the shares, no control | No. Recorded as a director |
| Lee Nominees Pty Ltd, trustee of the Lee Family Trust | 60% of the shares: more than half, so it controls Harbour | No. A company is never a beneficial owner: look through it |
| Ana | No shares and no board seat. Sole director and shareholder of Lee Nominees, and the trust’s appointor | Yes, through control. Verify her identity and screen her for PEP and sanctions before starting |
Sources: Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (ss 5, 11); AUSTRAC, Determining ownership and control structures Reviewed
An accounting practice is engaged to restructure Harbour Joinery Pty Ltd, a designated service under the Act. Harbour's directors are Ben and Priya, who hold 20% of the shares each. The other 60% is held by Lee Nominees Pty Ltd as trustee of the Lee Family Trust. ASIC extracts show that Ana is the sole director and shareholder of Lee Nominees, and the trust deed names her as appointor.
Ben and Priya are directors, so the practice records them as such, but at 20% each and without control they are not beneficial owners. Lee Nominees holds more than half of Harbour's shares, so it controls Harbour, and Ana controls Lee Nominees. Ana is Harbour's beneficial owner through control, though she holds no shares in Harbour and is not on its board. Before starting, the practice verifies her identity, screens her for PEP and sanctions, and files the ASIC extracts and trust deed that show the chain.
What StackGo does here
In StackGo's IdentityCheck, beneficial ownership for entity clients is part of Verify. For an Australian company, a UBO report sourced from registry data shows who owns it. Each beneficial owner can then be identity-verified and screened for PEP, sanctions and adverse media, with the results written back to the client record. Trusts are not on the ASIC register, so for a trust the deed and your own judgement settle who controls it. IdentityCheck doesn't decide who counts as a beneficial owner. You do.
Book a demo to see a company client's ownership checked end to end.
Frequently asked questions
Is a beneficial owner the same as a UBO?
Yes. Ultimate beneficial owner is the industry name for the same idea. The AML/CTF Act uses beneficial owner.
Can a company have no beneficial owner?
Yes, if no individual owns 25% or more and no one controls it. You then identify its chief executive officer or equivalent (Rules s 6-8).
Do I need the beneficial owners of a listed company?
No, if it is subject to disclosure rules that make its owners transparent. The same applies to government bodies and clients they control (Rules s 6-7).
Sources
Checked on 28 October 2026.
- Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (ss 5, 11, 28, 30, 32, 111, table 6), compilation of 1 October 2026
- Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (ss 6-2, 6-3, 6-7, 6-8, 6-17, 6-18), compilation of 31 March 2026
- AUSTRAC, Determining ownership and control structures, updated 20 October 2026
- AUSTRAC, Overview of initial customer due diligence, updated 27 March 2026
- AUSTRAC, Initial CDD for trust, updated 5 May 2026
- AUSTRAC, Initial CDD for body corporate, partnership or unincorporated association, updated 25 August 2026