What is a beneficial owner, and what do conveyancers collect about them?
A beneficial owner is the real person who ultimately owns or controls your client: broadly, someone who owns or controls 25% or more, or otherwise controls it. For company and trust clients you generally must identify them for AML, which means collecting personal information about people who aren't sitting in front of you, data the Privacy Act now covers.
By Jon Oates, Founder of Privaproof · Last updated
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General information, not legal advice. Your obligations depend on your circumstances.
What is a beneficial owner?
When your client is an individual buying or selling in their own name, the beneficial owner is usually just that person. It gets more involved when the client is a company, trust or other structure. A beneficial owner is the individual who ultimately owns or controls the customer: broadly, a natural person who owns or controls 25% or more (directly or through a chain of ownership), or who otherwise controls the customer even without hitting that percentage.
The idea is to see past the entity to the real people behind it, which is the whole point of anti-money-laundering checks, and also why it raises privacy questions a conveyancer didn't use to face.
Why do conveyancers have to identify them?
As part of AML customer due diligence, a reporting entity generally has to identify the beneficial owners of a customer that isn't a natural person, before providing the designated service. The AML/CTF Rules set out exactly who counts for each kind of structure (companies, trusts, partnerships) and the steps to verify them, so the detail depends on the entity in front of you. (Privaproof doesn't assess AML/CTF obligations; AUSTRAC does. Confirm the specifics with AUSTRAC guidance.)
| Client type | Who the beneficial owner might be |
|---|---|
| Individual in their own name | Usually the client themselves |
| Company | Individuals who own or control 25% or more, or otherwise control it |
| Trust | Individuals identified under the AML rules for trusts (e.g. those who control it) |
| Partnership / association | Individuals who control it under the AML rules |
Why is beneficial ownership a privacy issue too?
Here's what makes beneficial ownership a privacy issue and not just an AML one. To identify a beneficial owner you collect personal information about people who may not be your direct client: a company's shareholders, a trust's controllers. Those individuals are data subjects too. Because you gather that information in connection with your AML/CTF obligations, it's brought under the Privacy Act by s 6E(1A) just like your direct client's data (see what personal information you now collect for AML).
That means the beneficial-ownership information you hold needs the same care as the rest: it's covered by your privacy policy, it should be flagged in your collection process, and it has to be stored securely and retained no longer than required.
How should I handle beneficial-ownership data?
Practically, beneficial-ownership data isn't a special category with its own rulebook; it's part of the AML dataset you now protect. Collect what the AML rules require to identify and verify the beneficial owners, no more; hold it securely; and fold it into your retention schedule so it isn't kept indefinitely. The privacy obligations follow the data, whoever it's about.
Common questions
Is the beneficial owner always my client?
Not for company or trust clients. The beneficial owner is the individual who ultimately owns or controls the customer, which may be a shareholder or controller who isn't the person instructing you.
What does "25%" mean?
Broadly, an individual who owns or controls 25% or more of the customer, directly or through a chain of ownership, is a beneficial owner. Someone who controls the customer by other means can also be one, even below 25%.
Do I collect beneficial-owner data for an individual client?
For a client acting in their own name, the beneficial owner is usually just that person, so there's typically no separate third party to identify. The question mainly arises with companies, trusts and similar structures.
Is beneficial-owner information covered by the Privacy Act?
Yes. Because you collect it in connection with your AML/CTF obligations, s 6E(1A) brings it under the Privacy Act, even though it's about someone who may not be your direct client.
This is general information, not legal advice. Privaproof provides privacy tools and general information; it is not a law practice and does not provide legal advice, and it does not assess your AML/CTF obligations, which are administered by AUSTRAC. Privaproof's conveyancer materials are self-authored and are not independently reviewed by a solicitor. Sources: AUSTRAC, professional designated services; OAIC, privacy guidance for reporting entities under the AML/CTF Act; Privacy Act 1988 (Cth) s 6E(1A).