Onboarding a trust under AML/CTF involves more than identifying the person giving you instructions. You need to understand the trust structure, who is authorised to act, who benefits from it and who ultimately owns or controls it. That can mean working through trustees, corporate trustees, beneficiaries, appointors, settlers and other controlling parties before you have a complete picture of the customer. For conveyancers and property lawyers handling trust-related property matters, here’s what the onboarding process needs to cover.
Why do trusts need extra attention?
Trusts can involve multiple layers of ownership and control, which can make onboarding more complex. AUSTRAC rates trusts as a high national money laundering risk, but that does not mean every trust is automatically a high-risk customer. The risk still needs to be assessed based on the individual trust and the circumstances of the matter.
The purpose of onboarding is to understand the structure well enough to establish the trust’s identity, who is authorised to act, who benefits from it, who ultimately owns or controls it, and whether any relevant AML/CTF screening or further checks are required.
What do you need to establish about a trust?
AUSTRAC’s customer due diligence (CDD) guidance requires you to establish key information about the trust and the people connected to it. That means answering:
- What is trust? Its name, type and evidence that it exists.
- Who benefits from it? Each beneficiary, or a description of the relevant beneficiary class where individuals cannot be identified.
- Who acts for the trust? The trustee and any other representative dealing with you, including their authority to act.
- Who owns or controls it? This can include individual trustees, the individuals behind a corporate trustee, and any settlor, appointor, guardian, protector or other person exercising control.
- Are any relevant individuals PEPs or subject to targeted financial sanctions?
- Why is the trust engaging your services? This forms part of understanding the nature and purpose of the business relationship.
For trusts with no named beneficiaries, or a very large number of beneficiaries, a description of the beneficiary class may be appropriate.
Where the trustee is a company, there is an extra layer to work through. You also need to identify the person acting on behalf of the company and the individuals who ultimately own or control it.
What are the steps to onboard a trust?
Step 1: Identify the trust
Start by confirming the trust’s name, type and existence. The trust deed and any amendments are usually the key documents, along with other supporting records where needed.
Step 2: Identify the trustee and who is acting
Establish who the trustee is and who is giving instructions on the trust’s behalf. If the trustee is an individual, confirm their identity and authority to act. If the trustee is a company, you also need to identify the person acting for the company and the individuals who ultimately own or control it.
Step 3: Understand ownership and control
Look beyond the trustee to identify who ultimately controls the trust. This may include settlors, appointors, guardians, protectors or other individuals with influence over its decisions or assets. The aim is to understand who is really behind the structure, not simply who appears on the trust deed.
Step 4: Identify the beneficiaries
Identify each beneficiary or, where individuals cannot be identified, record the relevant beneficiary class. For discretionary trusts, this may include classes such as spouses, children or future descendants. The level of verification required will depend on the trust’s risk profile and your AML/CTF program.
Step 5: Understand the purpose of the trust and transaction
Establish why the trust is engaging your services and whether the transaction makes sense in the context of its purpose. For a property matter, this can include understanding how the purchase is being funded, whether third parties are contributing funds and whether the transaction aligns with what you know about the trust.
Step 6: Complete PEP and sanctions screening
Screen the relevant people connected to the trust, including trustees, representatives and beneficial owners, in line with your AML/CTF program. Correctly mapping the trust structure first helps ensure the right people are being screened.
Step 7: Assign the customer risk rating
Assess the trust based on its actual circumstances rather than assuming every trust is high risk. Factors such as complex ownership, overseas connections, unclear control or unexplained funding may increase the level of risk and trigger further checks or enhanced CDD.
What documents should you review?
Start with the trust deed and any amendments, including deeds of variation. These help establish the trust’s existence, structure and the powers of the people involved.
Depending on the trust, you may also use trustee resolutions, a memorandum of trust, information from an independent professional adviser or ABN Lookup. The documents you need, and how far you verify the information, should reflect the trust’s risk profile.
How can the triSearch Compliance Centre help?
The triSearch AML/CTF Compliance Centre brings trust onboarding into one structured workflow. For trusts, you can manage KYB onboarding alongside VOI, PEP, sanctions and adverse media screening, with additional checks such as source of funds and wealth where required.
Learn more about how the triSearch Compliance Centre can support your firm here.
