There is a question that should be keeping every accounting firm principal awake right now.

When did your firm last verify who actually controls the trusts on your client list?

Not the trustee. Not the contact person who signs the engagement letter and attends the annual review meeting. Not the entity name at the top of the trust deed.

The appointor.

The person with the legal power to remove and replace the trustee at any time, and therefore the person who actually controls the trust in any meaningful sense.

In most discretionary trusts, that person is the appointor. And in most accounting firms, that person has never been identified, verified, or documented for AML/CTF purposes.

That is about to become a significant compliance problem.

What beneficial ownership actually means

The concept of beneficial ownership is central to the AML/CTF framework that applies to accounting firms from 1 July 2026.

A beneficial owner is the natural person, or natural persons, who ultimately own or control an entity. Not the entity on paper. Not the immediate legal owner. The human beings at the end of the ownership and control chain.

For a straightforward company, that might mean identifying the shareholders who own more than 25 per cent of the shares and verifying their identities.

For a discretionary trust, it is more nuanced, and more demanding. The beneficial ownership question for a discretionary trust is not primarily about who the beneficiaries are. It is about who controls the trust. And in most discretionary trusts, control sits with the appointor, the person who holds the power to change the trustee.

That means identifying the appointor, verifying their identity, confirming their current residential address, checking whether they are a Politically Exposed Person, and documenting all of that on the client file.

If the appointor is a company, the verification chain extends further, to the directors and shareholders of that company, and potentially beyond if the ownership structure is layered.

Why most firms have not done this

The beneficial ownership verification obligation is not entirely new in concept; it has existed in various forms under anti-money laundering frameworks internationally for years. But for Australian accounting firms, it has never been a formal regulatory requirement until now.

As a result, most firms have built their onboarding processes around what they have always needed: the entity name, the contact person, the ABN, the trust deed, and a signed engagement letter.

Nobody asked for the appointor's driver's licence. Nobody ran a PEP check on the controller of the trust. Nobody traced the ownership chain through a corporate trustee to the natural persons who ultimately sit at the top of it.

Because nobody had to. Until now.

From 1 July 2026, for any engagement that involves a designated service, beneficial ownership verification is mandatory. The firm must identify and verify the natural persons who ultimately own or control every relevant entity, and document that process on the client file.

The scale of the problem

Consider what this means for a firm with 200 trust clients.

That is 200 beneficial ownership traces to complete. Two hundred appointors, or other controllers, to identify and verify. Two hundred ownership chains to document.

Some of those will be straightforward. The appointor is one of the individual trustees; their identity is already on file, and the structure is simple.

Many will not be straightforward. The appointor changed three years ago, and the firm's records were never updated. The corporate trustee's shareholders include an overseas company whose own ownership chain leads to a jurisdiction with limited transparency. The appointor is a company, and nobody has ever asked who owns that company.

This work does not complete itself. It cannot be delegated to an administrative team member without a clear process and proper training. And it cannot be done in a weekend before 1 July.

The UBO mapping process

The practical tool for beneficial ownership verification is the Ultimate Beneficial Owner (UBO), mapping form.

A UBO mapping form traces the ownership and control chain layer by layer, from the immediate entity through to the natural persons at the top of the structure.

Layer one documents the immediate ownership and control: the trustees, the appointors, the directors, the shareholders, whoever holds formal legal authority over the entity.

Layer two documents who owns or controls those parties, particularly where a corporate trustee or another entity sits at layer one.

Layer three identifies the ultimate beneficial owners: the natural persons who sit at the top of the chain, with no further entities above them.

For each natural person identified as an ultimate beneficial owner or controller, the firm must verify their identity, screen them against PEP and sanctions lists, and document the outcome.

That process must be completed at onboarding for every new designated service engagement. And it must be updated every time a change to ownership or control occurs during the engagement.

The most commonly missing document

Across all entity types, the single most commonly missing document in accounting firm client files is the appointor identity record for trust clients.

Not because firms are careless. Because the obligation to obtain it did not exist before now.

From 1 July 2026, it does exist. And the absence of that document, for a trust client receiving designated services, is a compliance failure on the face of the file.

What your firm needs to do

The starting point is a clear-eyed audit of your existing client base.

For every client receiving designated services, identify whether the firm has a current, verified beneficial ownership record. That means the natural persons who ultimately own or control the entity have been identified, their identities have been verified against acceptable documents, and the outcome has been documented on file.

Where that record does not exist, which will be most existing clients, a remediation process is required. High-risk clients should be prioritised. A structured, systematic approach is essential.

And for every new designated service engagement from 1 July 2026, beneficial ownership verification must be completed before work commences. No exceptions.

The firm rule

The rule is simple, even if the execution requires effort.

No entity is created, restructured, or administered without a completed and verified beneficial ownership record on file.

If the beneficial ownership chain cannot be traced and verified, work does not commence.

If a client refuses to provide the information required to complete the verification, that refusal is itself a risk indicator, and the engagement should not proceed.

Best Practice Group delivers a turnkey AML/CTF Tranche 2 Training and Certification Program designed specifically for public accounting firms. It includes a complete compliance playbook, two live implementation sessions across three rounds in May, June, and July, 16 operational templates, mandatory compliance assessments, and two certificates per participant issued by Best Practice Group.

If your firm needs to get operational before 1 July 2026, the time to enrol is now.

👉 Register for the AML/CTF Tranche 2 Training Program
👉 Get the AML Playbook

Or contact us directly:

📧 [email protected]
📞 1300 274 636

This article is general guidance only and does not constitute legal advice. Firms should confirm their specific obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and seek independent legal advice where required.