AML Compliance for Trusts & Companies in Real Estate: What Principals Need to Know

One of the most complex AML compliance situations in real estate is when a property transaction involves a trust, company, or multiple entities. AUSTRAC's requirement for beneficial owner identification suddenly becomes far more complicated than a simple individual purchaser.

This guide explains what principals need to do when trusts and companies are involved.

The Basic Requirement: Know Your Customer

AUSTRAC requires Customer Due Diligence (CDD) for all persons with whom you engage. When that "customer" is a trust or company, the requirement extends to identifying the beneficial owners — the real people who ultimately own or control the entity.

Why? Because trusts and companies can hide money laundering and terrorism financing. Identifying beneficial owners is essential to understanding actual risk.

Trusts: The Challenge

A discretionary trust structure:

• Trustee (the person legally holding the property)
• Beneficiaries (could be dozens; may be undetermined)
• Settlor (created the trust, may no longer control it)
• Director(s) of trustee company (if corporate trustee)

The problem: A trust may disclose a trustee name, but beneficial ownership can be hidden or complex.

The AUSTRAC expectation: You must make reasonable efforts to identify beneficial owners. If you cannot, you must document why and assess whether the risk is acceptable.

Companies: The Challenge

A company structure:

• Directors (may or may not be beneficial owners)
• Shareholders (including corporate shareholders, which obscures ownership)
• ACN registered with ASIC
• Beneficial owners (may be hidden behind multiple layers of corporate structures)

The problem: A company may be owned by another company, which is owned by another, which is owned by persons in offshore jurisdictions where beneficial ownership is not publicly available.

The AUSTRAC expectation: Same as trusts: make reasonable efforts to identify beneficial owners. If you cannot pierce corporate opacity, document your efforts and escalate for risk assessment.

International Entities: The Reality

If a company or trust is controlled from offshore, beneficial ownership records may not be publicly available. Different countries have different disclosure standards.

What AUSTRAC does NOT expect: Certainty where certainty is impossible. If beneficial ownership records don't exist, you cannot conjure them.

What AUSTRAC DOES expect: Documented effort to find what is publicly available, plus assessment of risk given the gaps.

Example decision: "XYZ Company Ltd is registered in Singapore, with directors Lee and Wong. Shareholders are three other Singapore companies. Corporate registry publicly available for two of the three shareholder companies shows natural person ownership. Third shareholder company's beneficial owners could not be determined from available sources. Risk assessed as moderate given partial transparency. File accepted with ongoing monitoring."

That is documented judgment. AUSTRAC can audit and understand your reasoning.

When to Escalate to Your Compliance Officer

• Trust with offshore beneficiaries or high-risk domicile
• Company with corporate shareholders or complex structure
• Beneficial ownership claims that don't match public records
• Trust or company with bearer shares or anonymous structures
• Entity controlled by or connected to PEPs
• Any situation where you are unsure about acceptable due diligence

A qualified Compliance Officer will work through these systematically and document the reasoning. This is exactly where human judgment matters.

Red Flags in Trust & Company Transactions

• Trustee unwilling or unable to disclose beneficiary information
• Company structure specifically designed to obscure beneficial ownership
• Beneficial ownership claims that change between documentation
• Entity controlled by individuals in high-risk jurisdictions without clear legitimate business reason
• Use of bearer shares or anonymous ownership structures

These are not automatic declines, but they warrant elevated scrutiny and documented reasoning.

Documentation Requirements

For both trusts and companies, AUSTRAC will want to see:

• Trust deed extract or company extract from ASIC
• Identity verification for named trustee/directors
• Beneficial owner information (or documented explanation of why it could not be obtained)
• Any correspondence requesting additional information from the customer
• Compliance Officer assessment and decision
• File closed note: approved, declined, or monitoring terms

This creates an evidence trail that shows you took AML seriously and made a documented judgment.

Technology vs. Judgment

Automated KYB software can help — it can check company registries, scan for PEPs, flag corporate structures for review. But it cannot make the judgment call about acceptable documentation gaps or decide whether a complex trust is acceptable risk.

That is where a Compliance Officer earns their value. They review what was found, what gaps remain, assess acceptability, and document reasoning.

Key Takeaways

• Beneficial owner identification is not optional. It is mandatory for trusts and companies.
• Reasonable efforts mean documented steps, not certainty.
• If you cannot identify beneficial owners, document why and escalate for risk assessment.
• A Compliance Officer is essential for complex structures. Let them do the judgment work.
• The evidence trail is crucial. What you did, what you found, who decided, why they decided — that is what AUSTRAC will audit.