How do I identify and verify the beneficial owner of a trust?

Trusts are one of the highest-risk client structures in AML/CTF compliance because they can obscure the true owner of assets. AUSTRAC's beneficial ownership requirements for trusts are more complex than for individuals or companies, and are a frequent gap in compliance reviews.

Who counts as a beneficial owner of a trust?

A beneficial owner is an individual who ultimately owns or controls the trust, or on whose behalf the trust is managed. For AML/CTF purposes, you must identify:

• All trustees: Including corporate trustees — if the trustee is a company, you must also identify the directors and shareholders of that company
• The settlor: The person who established and originally funded the trust (even if they no longer have a role)
• Named beneficiaries: Any individual specifically named in the trust deed as a beneficiary
• Beneficiaries with >25% interest: In fixed trusts, any beneficiary holding more than a 25% beneficial interest must be identified and verified

Discretionary trusts — the harder case

Discretionary (or 'family') trusts have no fixed beneficiaries — the trustee has discretion over who receives distributions. For these trusts, you must identify all potentialbeneficiaries or, where the deed refers to a class of persons, document that class clearly (e.g., 'the spouse and children of [the settlor]').

You are not required to verify every potential beneficiary, but you must be able to demonstrate that you understand the structure and have identified who could potentially benefit.

What documents should you collect?

• A certified copy of the trust deed (the primary document for establishing the structure)
• Identity verification for all trustees (and directors/shareholders of any corporate trustee)
• Identity verification for the settlor, if identifiable
• Any deed of variation or amendment that changes the beneficiaries or trustee
• The trust's ABN or TFN as registered with the ATO

Ongoing monitoring

Trust structures change over time — trustees resign and are replaced, beneficiaries are added, and deeds are varied. You must keep your beneficial ownership records current. Any material change to the trust structure should trigger a fresh review of your CDD records.