Screening an individual starts with a name and a date of birth. Screening a company is different, because the risk rarely sits with the company name alone. It sits with the people who own it, control it and act for it. If you only screen the name on the invoice, you can miss the director who is on a sanctions list or the shareholder who is a foreign politically exposed person (PEP).
This guide is a checklist of what to collect before you run a business screening check, where to find each item, and which names to screen once you have them. It uses Australian rules and registers as the worked example, because the reformed AML/CTF regime now applies to many small professional firms. The same approach works in most jurisdictions, though the registers and thresholds differ.
Why company screening needs more than a name
Company names are reused, changed and shortened. A trading name on a website may not match the registered legal name. A company can also be one layer in a chain, owned by another company that is owned by a trust. Screening a single name gives you a single result, and it can be the least useful one.
In Australia, AUSTRAC’s guidance for initial customer due diligence (CDD) on a body corporate, partnership or unincorporated association requires you to establish the identity of the organisation, the nature and purpose of your business relationship, the identity of its beneficial owners and the authority of the person acting on its behalf. Each of those produces names and identifiers you can screen.
The checklist: what to collect
| Information | Where to get it | Why you need it |
|---|---|---|
| Full legal name | Client, then the company register (ASIC in Australia) | The name the entity is registered under, which is what lists record |
| Trading names and former names | Client, business name register, company register history | Lists may hold an earlier or alternative name |
| Registration number | Company register (ACN in Australia) and business register (ABN) | The most reliable way to match the right entity |
| Country of incorporation | Company register or certificate of incorporation | Affects risk and which registers to check |
| Registered office and principal place of business | Company register, client | Supports identity and country risk |
| Nature of the business | Client, website, financial records | AUSTRAC expects you to collect information about the business or operations |
| Directors or equivalent officers | Company register | Officers are screened individually |
| Beneficial owners | Client, share register, ownership structure documents | People who own 25% or more, or who control the entity |
| Person acting on its behalf | Client, with evidence of authority | You must establish their identity and authority |
| Parent or holding entities | Company register, structure chart | Needed to follow the ownership chain |
Ask the client for a simple ownership chart if the structure has more than one layer. It is quicker than reconstructing it from registers, and you can then verify it against those registers.
Who counts as a beneficial owner
AUSTRAC defines a beneficial owner of a customer as an individual who, directly or indirectly, owns 25% or more of the customer or controls it. Indirect ownership matters. If a company owns your client, you follow the chain until you reach the individuals at the top.
Illustrative example. Your client is Harbour Lane Pty Ltd. It is 60% owned by Westgate Holdings Pty Ltd, and Westgate is owned 50/50 by two individuals. Each of those individuals indirectly owns 30% of your client (50% of 60%), so both are beneficial owners and both need to be screened, even though neither appears on Harbour Lane’s own share register.
Control counts too. A person who owns less than 25% but can appoint the board or direct how the company is run can still be a beneficial owner.
If you take reasonable steps and still cannot identify a beneficial owner, AUSTRAC’s guidance sets out a fallback for bodies corporate, partnerships and unincorporated associations. Follow it, and record the steps you took and why they did not work.
Trusts follow a different set of rules, covering trustees, settlors, appointors and other controlling people. Use AUSTRAC’s separate trust guidance rather than this checklist.
What to screen once you have the information
With the checklist complete, screen:
- the legal name of the entity, with its registration number and country
- any trading names and recent former names
- every director or equivalent officer
- every beneficial owner you identified
- the person acting on the entity’s behalf
- parent entities where the structure has more than one layer
Screen the individuals with their full names, dates of birth and nationality where you have them. As with individual screening, the more identifiers you enter, the fewer false positives you will have to review.
The results feed into one risk rating for the client. A PEP among the beneficial owners, or a sanctions match on a director, changes the risk of the company even if the company name itself returns nothing.
Order of steps for a small firm
- Collect the legal name, registration number and country from the client.
- Check the company register to confirm the name and number match and to obtain directors and any parent company.
- Ask for the ownership structure and identify beneficial owners, following any chain of companies.
- Confirm who is instructing you and their authority to act.
- Screen the entity, its names, its officers, its beneficial owners and its representative.
- Review potential matches, rate the client’s risk and record your decisions.
Doing it in this order means screening happens once, on complete data, instead of several times as information arrives.
Common mistakes
- Screening the trading name only. Sanctions and PEP lists record legal names, and the trading name may not appear.
- Stopping at the first layer of ownership. A holding company is not a beneficial owner. The individuals behind it are.
- Forgetting the person instructing you. An employee or adviser acting for the company also needs to be identified.
- Using an old register extract. Directors and shareholders change. Use a current extract.
- Treating a clear company result as a clear client. A director or owner can carry the risk even when the entity is clear.
Frequently asked questions
Do I need to screen every shareholder?
Not every shareholder. In Australia you need to identify beneficial owners, meaning individuals who own 25% or more, directly or indirectly, or who control the company. Your program may set a lower threshold for higher-risk clients.
What if the company is owned by another company?
Follow the chain until you reach the individuals who ultimately own or control it, and screen them.
Should I screen the company’s directors?
Directors are a sensible part of company screening because they control the entity and a match on a director affects your risk rating. Check what your own AML/CTF program requires.
What if the client will not tell me who the beneficial owners are?
Take reasonable steps using registers and documents. If the client refuses outright, treat it as a red flag and see our guide on what to do when a client will not provide ID or ownership details.
Is this the same in other countries?
The approach is similar, because most regimes follow the Financial Action Task Force (FATF) standards, but registers, thresholds and terminology differ. Check the rules where your client and your firm are based.
How NameScan can help
NameScan lets you screen both entities and individuals against PEP, sanctions and adverse media data on a pay-as-you-go basis, and offers KYB checks for business verification. You can screen the company and each director and beneficial owner as separate checks and keep the results together in your client file.
Start screening with NameScan, or read our explainer on the difference between KYC and KYB.
0 Comments