Company and trust formation CDD checklist for Australian TCSPs

Confirm the formation work is a designated service

Start with the facts of the engagement. AUSTRAC's professional designated-services guidance says item 6 covers assisting a person to plan or execute, or otherwise acting for a person in, the creation or restructuring of a body corporate or legal arrangement. Drafting formation documents, preparing appointments and taking other steps that directly advance creation can be captured. General information that merely influences a later decision may not be, but labels such as advisory, secretarial or filing support do not decide the issue.

Record when the service starts, what structure will be created, who instructed the work and which activities directly advance the outcome. Express trusts are covered, while testamentary trusts and trusts created solely by operation of law are treated differently in the designated-service provisions. Do not use item 6 as a catch-all for TCSP work: table 6 separately covers selling or transferring a shelf company under item 5, specified role services under item 7, nominee-shareholder services under item 8 and registered-office or principal-place-of-business address services under item 9. Items 1 to 4 may also apply where the TCSP directly advances the transaction they describe.

For items 7 and 8, identify the nominator and test the statutory role rather than relying on the word nominee. AUSTRAC says item 7 does not capture an ordinary agent performing only administrative or procedural steps. For an acting director, the nominator must retain control over fulfilment of the role and the director acts on the nominator's wishes and instructions. Item 8 applies where a person holds shares or an interest on another's behalf and either exercises the associated voting rights according to that person's instructions or receives dividends on their behalf. Arranging or preparing for another person to act can also be covered.

Item 9 applies when a registered-office or principal-place-of-business address is provided to a body corporate or legal arrangement in the course of carrying on a business. A one-off or free address service can still be in the course of business where it furthers the business, but merely receiving correspondence or sharing an address outside a business setting is not automatically the designated service. Record the address use, customer and business context instead of assuming every address reference is captured.

Identify the customer set before collecting documents

The customer for AML/CTF purposes is not always identical to the name on an engagement letter. For creating a company, identify the instructing person and the proposed beneficial owners and directors described in item 6. For creating an express trust, identify the instructing person and the proposed trustee, settlor and beneficiaries. Where a beneficiary cannot yet be individually identified because the trust uses a class, collect an accurate description of the class and apply the current Rules and AUSTRAC trust guidance to the verification required.

Also identify each individual who deals with you for a non-individual customer and establish their authority. A director, employee, lawyer or adviser presenting documents is not automatically the beneficial owner. Keep the representative, the person on whose behalf a service is received, the legal customer and the ultimate owners or controllers as separate concepts in the file.

Company formation CDD checklist

Do not allow a clean registry search to replace ownership analysis. Proposed companies may not yet have a completed public record, and nominee or layered holdings may make the apparent shareholder different from the individual who ultimately owns or controls the customer. Preserve the source, date and result of every verification step so another reviewer can reproduce the conclusion.

• Record the proposed company name, legal form, jurisdiction, registered office, principal place of business and intended business activity.
• Identify proposed directors, beneficial owners and any person exercising control through voting rights, agreements, appointment powers or another mechanism.
• Map direct and indirect ownership through every intermediate entity until the relevant natural persons are established on reasonable grounds.
• Verify identity and authority using reliable and independent documents or data appropriate to the assessed risk; an ASIC or ABR result does not by itself verify every individual behind the structure.
• Establish the nature and purpose of the relationship and expected services. Collect or verify source-of-funds or source-of-wealth information when required by the current PEP or enhanced-CDD rules, or when the risks and documented policies call for it; it is not a universal formation-document requirement.
• Check relevant people for politically exposed person status and targeted financial sanctions, then apply the response required by your AML/CTF policies.

Express trust formation CDD checklist

• Obtain the draft or executed deed and amendments, and record the trust type, purpose, governing law and intended activities.
• Identify the trustee, settlor, appointor, protector, guardian and other individuals responsible for governance or executive decisions where those roles exist.
• Identify each beneficiary or accurately describe each beneficiary class when individual identification is not possible because of the nature of the trust.
• For a corporate trustee, map and verify the company's ownership and control structure rather than stopping at the corporate trustee's name.
• Establish who is providing instructions, their authority, the origin of settled property and the commercial or family purpose for creating the arrangement.
• Resolve inconsistencies between the deed, onboarding answers, registry information and instructions before treating the CDD file as complete.

Make and evidence the risk decision

Assess customer, service, delivery-channel and jurisdiction risks together. Formation work, a nominee, an address service or a complex structure does not by itself make every customer high risk or automatically require enhanced CDD. Unexplained layers, opaque control, a structure or transaction that is unusually complex, relevant high-risk-jurisdiction exposure, unexplained wealth or pressure to form immediately can change the assessment. Apply enhanced CDD when a current statutory trigger is met, including a high customer ML/TF risk rating, and tailor the measures to the risk. Record the evidence, rating, trigger, measures and approval.

Initial CDD is generally completed before providing the designated service. Delayed CDD is available only in defined circumstances and under compliant policies; urgency or a looming registration deadline is not enough. If the required matters cannot be established, pause and escalate the file. Keep the scope decision, identity evidence, ownership map, screening results, risk assessment and approval together so the organisation can demonstrate what it knew when formation proceeded.