Introduction

When a customer is an individual, identity verification is relatively straightforward: a driver’s licence, a passport, a utility bill for address verification. When the customer is a company, a trust, a partnership, or some other legal entity, the process gets more involved. That is the territory of Know Your Business, or KYB.

Under Australia’s AML/CTF framework, KYB is a mandatory component of the customer due diligence (CDD) process. For Tranche 2 entities coming into the regime from 1 July 2026, it is one of the more practically challenging compliance requirements. Real estate agents dealing with investor buyers, accountants servicing corporate clients, and lawyers managing transactions involving trusts and companies will all need to understand how to verify corporate customers to AUSTRAC’s standards.

NameScan has provided AML and KYB screening to over 27,000 businesses globally, including businesses navigating corporate verification requirements under various regulatory frameworks. This guide explains what KYB involves under Australia’s AML/CTF regime, how to work through the beneficial ownership chain, and what your documentation needs to show.

What Is KYB and Why Does It Matter?

KYB (Know Your Business) is the process of verifying the identity and ownership of a legal entity customer: a company, trust, partnership, or other non-individual structure. The purpose is the same as KYC for individuals: to establish who you are actually dealing with and whether that party presents an ML/TF risk.

Legal entities are attractive vehicles for money laundering precisely because they can obscure the identity of the individuals behind them. Layering and integration, two stages of the money laundering cycle, often involve companies and trusts to place distance between illicit funds and their ultimate beneficiary. AUSTRAC’s data shows that complex ownership structures are a consistent feature of major money laundering investigations in Australia.

KYB is not a separate obligation from CDD. It is how CDD works when the customer is a legal entity. AUSTRAC’s AML/CTF Rules require reporting entities to identify and verify the beneficial owners of non-individual customers as part of the customer identification procedure.

Step 1: Verify the Legal Entity

The first step in KYB is verifying that the entity itself is what it claims to be. For Australian companies, this means:

  • Confirming the company’s name and ACN (Australian Company Number) against the ASIC register.
  • Obtaining a current ASIC company extract, which shows the registered address, directors, and shareholders.
  • Verifying that the company is currently registered and not deregistered, in liquidation, or subject to administration.

For entities incorporated offshore, verification will typically require documentation from the equivalent company registry in the relevant jurisdiction: Companies House in the UK, the SEC in the US, or similar.

For trusts, there is no central registration in Australia. Verification requires the trust deed itself, or a certified extract of the relevant provisions: trustee names, beneficiary classes, and the date and parties to the deed. For partnerships, verification requires partnership agreements and confirmation of the partners’ identities.

Step 2: Identify the Beneficial Owners

Beneficial ownership is at the heart of KYB. AUSTRAC’s AML/CTF Rules define a beneficial owner as the natural person who ultimately owns or controls the entity. The standard threshold for Australian companies is a 25% or greater ownership or voting interest. But control can also be exercised through other means (such as the right to appoint or remove directors), and those mechanisms also need to be traced.

In practice, tracing beneficial ownership through a corporate structure involves:

  • Starting with the entity’s shareholder register, available from ASIC for Australian companies.
  • Identifying any shareholders that are themselves legal entities (holding companies, trusts, foreign companies) and tracing through those layers.
  • Continuing until you reach the natural person or persons who ultimately own or control the entity: the ultimate beneficial owner, or UBO.

If no individual meets the 25% threshold, AUSTRAC’s guidance indicates you should identify the senior managing official (typically the CEO or managing director) as the beneficial owner for compliance purposes.

Step 3: Verify the Beneficial Owners

Once you have identified the UBOs, verify their identity using the same standard you would apply to an individual customer: name, date of birth, residential address, and identity document verification. For domestic UBOs, this can be done using Australian identity documents verified against the Document Verification Service (DVS) or through comparable documentary methods. For foreign UBOs, you may need to rely on certified copies of foreign identity documents or verification reports from regulated third parties.

Where a UBO is a foreign PEP, enhanced due diligence is mandatory. See the separate guide on EDD for what this involves in practice.

Step 4: Screen the Entity and Its Beneficial Owners

Once you have verified the entity and its UBOs, all parties need to be screened against sanctions lists, PEP databases, and adverse media sources.

  • Sanctions screening: The entity itself, its directors, and its UBOs should be checked against OFAC’s SDN list, the UN Consolidated Sanctions List, Australia’s DFAT Consolidated List, EU and UK (OFSI) sanctions registers, and any other lists relevant to your customer’s jurisdictions.
  • PEP screening: All UBOs and directors should be screened for PEP status. If a UBO is a PEP, enhanced due diligence applies.
  • Adverse media: The entity and its key persons should be checked for negative news linked to financial crime, fraud, corruption, or other serious criminal activity.

NameScan allows you to screen individuals and entities against 100+ global sanctions lists, PEP databases covering 20,000+ government sources, and adverse media sources, all from a single pay-as-you-go platform.

Step 5: Document the Outcome

Every KYB check must be documented in a way that creates an auditable trail. Your records should show:

  • The legal entity’s verification documents (ASIC extract, trust deed, partnership agreement).
  • The methodology used to trace the beneficial ownership chain.
  • The identity verification evidence for each UBO.
  • The results of sanctions, PEP, and adverse media screening for the entity and its key persons.
  • Your risk assessment decision and any conditions applied to the relationship.

All records must be retained for seven years under the AML/CTF Rules.

Special Cases: Trusts and Complex Structures

Trusts present a particular challenge for KYB because they are not publicly registered in Australia. The beneficial owners depend on how the trust is structured. A fixed trust has identifiable beneficiaries. A discretionary trust has a class of potential beneficiaries and a trustee with discretion over distributions.

For a discretionary trust, AUSTRAC’s guidance indicates that you should verify the trustee (and if the trustee is a company, trace through to its UBOs), identify the settlor of the trust, and understand the beneficiary class. You do not need to identify every potential beneficiary, but you should understand the class and assess whether any members present elevated risk.

Where structures are genuinely complex (multiple layers of holding companies, offshore trusts, or nominee arrangements) and you cannot adequately establish who the UBOs are, your risk assessment should reflect that uncertainty and EDD should apply.

Conclusion

KYB adds depth to the compliance process, but the core logic is straightforward: verify the entity exists and is legitimate, trace through the ownership structure to find the natural persons who control it, verify those persons, and screen everyone involved. Document the whole process with enough detail that you could explain your reasoning to AUSTRAC.

For Tranche 2 entities dealing with a mix of individual and corporate clients, having a screening tool that handles both in a single platform makes compliance more manageable. NameScan’s KYB functionality supports entity verification and screening alongside individual PEP and sanctions checks, with the same pay-as-you-go, no-minimum model.

Frequently Asked Questions

What is KYB in AML compliance?

KYB (Know Your Business) is the process of verifying the identity and beneficial ownership of a non-individual customer: a company, trust, partnership, or other legal entity. Under Australia’s AML/CTF Act, reporting entities are required to identify and verify the beneficial owners of corporate customers as part of their customer due diligence (CDD) process. KYB is not a separate obligation from CDD. It is how CDD applies when the customer is a legal entity rather than an individual.

Who counts as a beneficial owner under AUSTRAC’s rules?

A beneficial owner is the natural person who ultimately owns or controls a legal entity. AUSTRAC’s standard threshold is a 25% or greater ownership or voting interest. If no individual meets this threshold, the senior managing official of the entity is identified instead. Control can also be exercised through rights to appoint directors or through other mechanisms, which must also be traced. For trusts, the trustee, settlor, and beneficiary class are all relevant to the beneficial ownership assessment.

What documents do I need to verify an Australian company?

To verify an Australian company, obtain a current ASIC company extract confirming the company name, ACN, registered address, directors, and shareholders. Verify that the company is currently registered and in good standing. For each UBO identified through the ownership trace, you will need identity verification documents (typically an Australian driver’s licence or passport) checked against ASIC records, the Document Verification Service (DVS), or equivalent reliable sources.

Does KYB apply to trusts?

Yes. When your customer is a trust, you must verify the trustee (and trace through to the UBOs if the trustee is a corporate entity), understand the trust structure and beneficiary class, and review the trust deed. Trusts are not publicly registered in Australia, so verification depends on obtaining the trust deed itself or a certified extract of its key provisions. Where the trust structure obscures beneficial ownership, enhanced due diligence may be required.

Do I need to screen the company as well as its directors and owners?

Yes. Both the entity itself and its key persons (directors, UBOs, and in some cases major shareholders) should be screened against sanctions lists, PEP databases, and adverse media sources. A company can itself be designated under sanctions, particularly for foreign entities. The presence of a PEP or sanctioned individual among the beneficial owners or directors changes the risk profile and may trigger enhanced due diligence obligations.

NameScan supports KYB and individual screening in one platform: PEP, sanctions, adverse media, and entity verification. Pay as you go, no minimum commitment: namescan.io