Assess the structure's purpose first
The first question is not the jurisdiction; it is the purpose. A holding company for a genuine cross-border business with a clear operating rationale is different from a layered structure with no economic function. Ask what the structure does, who benefits and why this form was chosen. The answer drives the risk assessment and the CDD depth.
Record the purpose analysis in the file. A structure with no credible purpose is a red flag even when every jurisdiction is low risk; a genuine structure is not automatically high risk merely because it is foreign.
Map ownership through the layers
The ownership map is the TCSP's core evidence for foreign structures. A file that ends at a foreign holding company without identifying its owners has not completed the analysis. The Rules and AUSTRAC guidance on ownership and control apply regardless of where the entity is registered.
- Walk each ownership chain to the ultimate individuals
- Aggregate effective ownership across multiple chains
- Identify control roles: trustees, appointors, directors and habitual instruction
- Record the source for every holding: register, deed, extract
- Flag circular or unverifiable holdings for manual review
Treat jurisdiction and product factors together
A high-risk jurisdiction increases the scrutiny a structure needs; it does not alone decide the rating. The file should show how jurisdiction, ownership, purpose and activity combine into a risk rating, and what enhanced measures follow.
- Sanctions and FATF-identified jurisdictions
- Transparency of registers and availability of ownership records
- Nominee and bearer-share arrangements
- Cross-border payment patterns and funding sources
- Political exposure of the beneficial owners
Monitor and report
Offshore structures change silently: a new director, a transferred trust, a changed beneficiary. The monitoring cycle should be anchored to the structure's own events, not only the calendar.
- Review ownership and control on defined triggers
- Monitor nominee and registered-office activity
- Escalate unexplained changes or inconsistent information
- Lodge SMRs where the structure or its activity creates reasonable suspicion
- Protect SMR-related information from tipping off
Official sources
Use these primary AUSTRAC pages to confirm the current rules and apply them to your circumstances.
Frequently asked questions
Is a foreign structure automatically high risk?
No. The risk assessment considers purpose, ownership, jurisdiction, products and activity together. Foreignness is a factor, not a verdict.
How far must we trace ownership?
Until every chain reaches an individual or a defined control role, using the Rules and AUSTRAC guidance on ownership and control. Record the calculation trail.
What if a foreign register is not accessible?
Collect the information through the customer and other reliable sources, document the attempts, and do not complete the service where ownership cannot be established on reasonable grounds.
What enhanced measures fit offshore structures?
Source-of-funds and wealth review, senior approval, more frequent monitoring and verification of the ultimate individuals are common responses. The measures should match the assessed risk.
Put it into practice
Cassandra AML turns these obligations into a working system: designated-service decisions, customer due diligence, screening, monitoring and reporting records — hosted in Sydney, free to start.
This guide is general information for Australian professionals. It is not legal advice and does not replace the AML/CTF Act, the AML/CTF Rules or AUSTRAC guidance. Confirm your specific obligations with AUSTRAC or a qualified legal adviser. See our editorial and correction standards.