A trust and company service provider may enter the AML/CTF regime when it supplies a specific table 6 service with the required Australian geographical link. Those services include company or express-trust creation, a qualifying change of legal form, shelf-company transfers, item 7 or 8 acting arrangements, item 9 address services, specified transaction work and item 3 property management. General entity administration alone is not automatically designated, so map each service to the statutory item instead of relying on the TCSP label.
Why TCSPs are squarely in scope
The professional designated services overlap with common TCSP work: creating companies or express trusts; changing the legal form of a body corporate or legal arrangement, including through a merger or demerger; transferring shelf companies; providing an item 7 acting arrangement or item 8 nominee-shareholder service on behalf of a nominator; providing a registered-office or principal-place-of-business address in the course of business; and directly advancing specified transactions. If the business provides one of those services with the required link, it is a reporting entity for that work.
The risk AUSTRAC sees in your service
Structures can obscure ownership, which is why AUSTRAC expects reporting entities to establish the customer, representatives, beneficial owners and relevant control relationships. For a captured TCSP service, the file should explain who receives the service, who ultimately owns or controls each relevant entity or arrangement, and why the requested structure and roles make commercial sense.
Customer due diligence for a TCSP
- Verify the instructing client (the person or business engaging you) before the formation or service is provided
- Map and verify the beneficial owners of every entity you form: the individuals at 25% or more, or who control it another way (appointors, trustees, controllers)
- Walk layered structures: where an entity owns an entity, keep walking until you reach real people
- Screen the client, the new entity's controllers and beneficial owners against sanctions, PEP lists and adverse media
- Record a risk rating per engagement: offshore controllers, complex layering and unexplained urgency all push risk up
- Review and, where appropriate, reverify on a risk-based cycle for ongoing designated-service relationships
Ongoing services mean ongoing obligations
A completed one-off formation can produce a point-in-time relationship, while an ongoing item 7 or 8 acting arrangement or item 9 address service creates continuing designated-service exposure. General administration does not become designated merely because it continues. Where the designated-service relationship is ongoing, apply ongoing CDD, risk-based reviews and event triggers for ownership, control, purpose, jurisdiction and instruction changes. Nominee arrangements require especially clear records of the nominator and the wishes or instructions governing the role.
Red flags in formation and administration work
Treat these indicators as review and escalation triggers. Lodge an SMR only when the available facts establish reasonable grounds for a section 41 suspicion, then meet the applicable deadline. Do not disclose protected SMR-related information where that would or could reasonably be expected to prejudice an investigation.
- Clients who cannot or will not explain the commercial purpose of the structure
- Unnecessary layers, especially across jurisdictions with no business logic
- Requests for nominee arrangements designed to distance the real owner from the entity
- Shelf company transfers where the buyer's identity or purpose is vague
- Clients who resist beneficial-ownership disclosure or provide inconsistent ownership stories
Official sources
Confirm the current rules against these primary sources.
Questions
We only form companies: we never touch client money. Are we captured?
Yes. Forming a company or trust is itself a designated service; handling money is not required for capture. A formation-only business is a reporting entity and needs enrolment, a program, CDD and record-keeping like everyone else.
Who is the beneficial owner of a company we form for a client?
The individuals who ultimately own or control it: normally those holding 25% or more directly or indirectly, plus anyone controlling it another way, such as an appointor or a person with veto rights. Where a client asks you to act as nominee shareholder, the beneficial owner is the person you are holding for, and the file must say so.
Do we need to redo CDD for entities we formed years ago?
Apply the current transition rules first. For an ongoing designated-service relationship, conduct ongoing CDD and review or reverify on risk-based and event-driven triggers. General administration alone is not automatically designated. For a completed one-off formation, retain the required records and reassess scope and CDD if the customer returns for new work.
Can we refuse a formation if the client fails verification?
You must not provide the designated service if you cannot complete the required due diligence. A clear verification-first policy at engagement time is the simplest control.
General information for Australian professionals, not legal advice. It does not replace the AML/CTF Act, the Rules or AUSTRAC guidance. See our editorial standards.
Keep reading
- Nominee arrangements4 min
How item 7 acting arrangements and item 8 nominee-shareholder services apply to TCSPs and professional practices: customers, ownership, risk, CDD and red flags.
- Registered office services3 min
When providing a registered office or principal place of business in the course of business becomes item 9: CDD, monitoring, mail handling and red flags.
- Formation CDD checklist9 min
A file-ready customer due diligence checklist for Australian trust and company service providers creating companies, express trusts and related structures.