Beneficial ownership in real estate: what AML/CTF rules require your agency to do — AML Simple

When a company or trust is buying a property, who are you actually dealing with?

The company name on the contract might be a shell. The trust might have a corporate trustee. Behind every corporate structure, there are real people — and under Australia's AML/CTF rules, you must identify them.

This is the beneficial ownership obligation. It applies to every non-individual client in a property sale your agency facilitates from 1 July 2026.

The fast path: let the CDD workflow guide you

When you add a client in AML Simple and their client type is set to Company or Trust, the CDD workflow automatically prompts you to collect beneficial ownership information. The questions adapt to the structure:

For companies: you are asked to identify shareholders with 25% or more ownership, or who exercise effective control
For trusts: you are asked to identify the trustee, the settlor, and the beneficiaries (especially those with a fixed interest of 25% or more)
For trusts with corporate trustees: the workflow chains through to identifying the individuals behind the corporate trustee

All beneficial ownership records are stored in your client file and retained for 7 years automatically.

Want to understand what the rules actually require before you go through the workflow? Here is the full picture.

What is a beneficial owner?

A beneficial owner is a natural person — a real human being — who ultimately owns or controls a legal entity. The AML/CTF framework requires you to look through the corporate or trust structure until you find the people.

The threshold for ownership is 25% or more. Anyone who owns or controls 25% or more of a company, or has 25% or more of an economic interest in a trust, is a beneficial owner for AML purposes.

"Effective control" is a separate test. Even if no single person owns 25%, someone who exercises effective control of the entity — the person who makes the decisions about how the funds are used or where the property goes — is a beneficial owner.

Source: AML/CTF Act 2006; AUSTRAC guidance on beneficial ownership

Why beneficial ownership matters in real estate

Property is one of the most commonly used asset classes for money laundering globally. Complex corporate and trust structures are a preferred method for obscuring the source of funds and the identity of the ultimate owner.

Common patterns include:

A shelf company with anonymous shareholders buying property in a premium market
A discretionary trust with an offshore corporate trustee — making it difficult to identify who ultimately benefits
A series of companies where each company is owned by another, with the beneficial owner obscured several layers deep
Nominee arrangements where a company director or nominee acts on behalf of an undisclosed principal

AUSTRAC's risk guidance for real estate specifically flags complex corporate structures with no clear legitimate purpose as a red flag requiring enhanced due diligence.

Source: AUSTRAC risk insights for real estate

How to identify beneficial owners in practice

For companies

When a company is purchasing property:

Identify the company itself — collect the company name, ACN or equivalent, registered address, and jurisdiction of incorporation
Identify the directors — who has authority to bind the company?
Identify shareholders with 25%+ ownership — ask for the company's shareholder register or equivalent documentation
Look through corporate shareholders — if a shareholder is itself a company, repeat the process for that company until you reach natural persons
Apply the effective control test — is there anyone who exercises effective control that is not captured by the 25% ownership test?
Verify identity for each beneficial owner — the same verification requirements as for individual clients (name, date of birth, residential address, verified using reliable and independent means)

If you cannot identify a beneficial owner through the above process — for example, a company with widely dispersed ownership and no individual above 25% — document your analysis and the conclusion you reached.

For trusts

Trust structures vary, which makes them more complex than companies. When a trust is purchasing property:

Identify the trustee — who holds the legal title? If the trustee is a company, you must also identify the beneficial owners of that company (see above)
Identify the settlor — the person who established the trust
Identify the beneficiaries with a fixed 25%+ interest — for fixed trusts. Discretionary trusts often have no fixed beneficiaries, so you identify the class of potential beneficiaries
Identify whoever exercises effective control — typically the trustee, but may include a guardian or appointor
Identify any protector — if the trust deed includes a protector with powers to remove or appoint trustees

For discretionary trusts, there may be no beneficiary with a fixed 25% interest. In this case, you document the class of beneficiaries as described in the trust deed, identify who exercises effective control, and apply appropriate risk-based CDD.

When enhanced CDD applies

If you identify a beneficial owner who is a foreign Politically Exposed Person (PEP) — a senior foreign government official or their close associate — Enhanced CDD is required. This means:

Senior management approval before proceeding with the transaction
Additional identity verification
Source of funds and source of wealth verification
Enhanced ongoing monitoring

Foreign PEPs using complex trust or company structures to purchase real estate is a high-risk indicator that requires you to consider whether to file a Suspicious Matter Report.

Source: AML/CTF Act 2006; AUSTRAC PEP guidance

What records you must keep

For each beneficial owner identified:

Their full legal name
Date of birth
Residential address
How you verified their identity (method, documents, date)
Their ownership percentage or the basis for their control

These records must be retained for 7 years after the transaction. Source: AML/CTF Act 2006, s 107.

The practical reality for most agencies

For the majority of transactions — individuals buying in their own name — the beneficial ownership question does not arise. Standard initial CDD applies.

The obligation becomes significant when:

A company is purchasing (especially private companies, shelf companies, or foreign companies)
A trust is purchasing (especially discretionary trusts and trusts with corporate trustees)
Someone is purchasing "as trustee for" a named trust
The funds are coming from an overseas entity

Build the question into your intake process so it becomes routine. When you receive a contract of sale or start working with a new buyer client, note the buyer entity type. If it is not an individual, your beneficial ownership process starts.

For the full CDD picture, read Customer due diligence for real estate: a plain-English guide. For the complete compliance overview, see the AUSTRAC Tranche 2 guide for real estate agencies.

This content is general information only and does not constitute legal or AML/CTF advice. For tailored advice, consult a licensed AML/CTF advisor. AML Simple is a compliance tool, not a law firm.

Want a personalised Tranche 2 readiness score for your agency? Take the free 5-minute Readiness Check → amlsimple.com/check