By Justin Amos, Co-Founder & CEO, iDeed Pty Ltd
Part of the iDeed Beyond the Checkbox series
There’s a moment that happens in almost every CDD software demo.
The sales person walks you through the platform - clean interface, intuitive workflow, guided steps. It looks straightforward. It feels manageable.
Then someone in the room asks:
“What happens when our client is a discretionary trust with a corporate trustee, and the shares in the trustee company are held by a nominee on behalf of a foreign beneficiary?”
The room goes quiet.
Because here’s the truth that the compliance software market doesn’t talk about nearly enough: UBO determination in Australia isn’t a lookup. It isn’t a form. And for a significant proportion of your clients, it isn’t something any automated system can reliably get right.
This week, a major Australian financial institution, big budget, full compliance team, got our Company UBO determination wrong. Sent requests for documents that weren’t relevant. Chased certified trust deeds for entities that were not required and had nothing to do with the actual UBO. Three hours of a working day gone. Sensitive documents be passed around in emails.
Their problem? They bolted UBO calculation onto a platform never designed for it. In a world of trusts and non-beneficially held shares, that’s not a minor gap. It’s a fundamental one.
What UBO Actually Means, and Why It’s Harder Than It Sounds
Under Australia’s AML/CTF framework, an Ultimate Beneficial Owner is broadly defined as the natural person who ultimately owns or controls a customer, or on whose behalf a transaction is conducted. Typically this means anyone with 25% or more ownership or control - directly or indirectly.
Simple enough in theory.
In practice, Australian business structures were not designed with UBO transparency in mind. They were designed for tax efficiency, asset protection, estate planning and commercial flexibility. The result is a landscape of ownership structures that can make genuine UBO determination genuinely complex, and sometimes genuinely ambiguous.
The Trust Problem
Discretionary trusts are the backbone of Australian private business and family wealth structures. And they present a fundamental challenge for UBO determination that automated systems consistently struggle with.
In a discretionary trust, no beneficiary has a fixed or vested entitlement to the trust’s income or capital. The trustee exercises discretion each year as to who receives what. There is, technically, no beneficial owner in the traditional sense - because nobody owns anything until the trustee decides they do.
So who is the UBO?
The answer depends on a careful reading of the trust deed, the class of beneficiaries, the identity and control of the trustee, and, critically - the exercise of judgement about who actually controls the trust and who ultimately benefits from it in practice.
An automated system presented with a discretionary trust doesn’t exercise judgement. It applies rules. And rules applied to discretionary trusts produce answers that are frequently wrong, frequently over-inclusive, and occasionally dangerously under-inclusive.
The Non-Beneficially Held Shares Problem
Non-beneficially held shares add another layer of complexity that many compliance platforms simply don’t account for.
When shares are held non-beneficially - by a nominee, a bare trustee, a custodian or in any other capacity where the legal owner is not the beneficial owner - the entity that appears on the share register is not the entity that matters for UBO purposes.
This is not an edge case. Nominee shareholdings are common in professional services structures, family arrangements, joint ventures and foreign-owned Australian entities. Custodial arrangements are standard in investment structures. Bare trusteeships appear regularly in estate and succession planning.
In each case, looking at the share register and applying a percentage ownership calculation will produce the wrong answer. The legal owner isn’t the beneficial owner. The UBO is somewhere behind the register - and finding them requires investigation, not automation.
The Matrix Problem
Now combine the two.
A discretionary trust - no fixed beneficial entitlement - holding shares non-beneficially through a corporate trustee - where the shares in the trustee company are themselves held through another structure.
Layer in:
- Multiple classes of shares with different voting and economic rights
- Foreign entities where equivalent UBO concepts don’t map neatly to Australian definitions
- Structures with both fixed and discretionary elements
- Entities where control and ownership are deliberately separated
- Succession arrangements where beneficial ownership is contingent on future events
The matrix of possible combinations is not theoretical. It is the day-to-day reality of Australian private business. And the number of automated systems that can navigate it reliably is approximately zero.
This is not a criticism of the platforms. It’s a structural limitation of what automation can do in a domain that requires legal interpretation, structural analysis and genuine professional judgement.
What Getting It Wrong Actually Costs
The bank that got our Company UBO wrong didn’t just cause inconvenience. They caused:
- Three hours of lost productive time - real money, real opportunity cost
- A request for four trust deeds - certified as originals - for entities that weren’t relevant to the actual ownership structure
- A request for iDeed’s own certified company constitution - because the bank had misread our cap table and incorrectly identified one of our own shareholders as a UBO which they weren’t
- Sensitive structural and shareholder information about our own company being demanded unnecessarily - based entirely on an automated misreading of our ownership structure
- Sensitive documents exchanged via plain email - no secure portal, no guided process, no audit trail
- A compliance determination that was wrong - not just inconvenient, a regulatory failure
- A customer relationship under serious strain - and a director who now has very legitimate questions about that institution’s competence
And here’s the part worth sitting with: if that determination had gone unchallenged - if the customer hadn’t had the knowledge to push back - the wrong UBO would have been recorded. The compliance file would have looked complete. And the actual beneficial owner would have gone unverified.
That’s not compliance. That’s a false sense of compliance. And in a post-Tranche 2 world, that’s a liability.
Why This Matters for Your Practice
If you’re a lawyer, accountant or property agent thinking about your CDD obligations, here’s the honest question to ask yourself:
For what proportion of my clients is UBO determination genuinely straightforward?
For individual clients - straightforward. For simple companies with individual shareholders - manageable. For anything involving a discretionary trust, a corporate trustee, nominee shareholdings, layered structures or foreign ownership - complex.
And in Australian professional services, that complexity is not the exception. It is the norm.
Every discretionary family trust. Every SMSF trustee structure. Every company with a trust as a shareholder. Every nominee arrangement. Every foreign-owned entity.
If your CDD solution can’t handle the matrix - if it bolts UBO calculation onto a process never designed for it - you are not compliant. You have the paperwork of compliance without the substance of it.
The iDeed Approach
Our team includes specialists who understand Australian trust law, corporate structures and beneficial ownership determination in the way that compliance genuinely requires.
When a complex structure lands on our desk - and they do, every day - we don’t apply a rule and move on. We read the deed. We map the structure. We identify who actually controls and benefits. We make a determination that’s defensible, documented and right.
We conduct PEP and sanctions screening with proper context. We identify the correct individuals - Senior Managing Officials, relevant Directors, Authorised Persons - not a blanket sweep of everyone connected to the entity.
And we do all of this through a secure, purpose-built platform that your clients’ customers can trust - not an email chain asking for certified originals.
This is what “specialist team” actually means. Not a helpdesk. Not a guided workflow. Genuine expertise, applied to genuinely complex problems, producing determinations you can stand behind.
The Question to Ask Any CDD Provider
Before you commit - to us or anyone else - ask this:
“My client is a discretionary trust. The trustee is a Pty Ltd. Two of the shares in the trustee company are held non-beneficially by a nominee. Who are the UBOs, and how does your platform determine that?”
If the answer involves a percentage ownership calculator and a form - you have your answer.
If the answer involves a specialist sitting down with the trust deed - you have a very different conversation.
Ready to talk through how iDeed handles complex structures? Book a 15 minute call at ideedworks.com.au - no pressure, just a straight conversation with someone who actually knows the answer.
Explore the full Beyond the Checkbox series at ideedworks.com.au/blog
Justin Amos is Co-Founder and CEO of iDeed Pty Ltd, operators of ARCaml - an AML/CTF compliance platform built for Australian designated service providers. ideedworks.com.au
Justin Amos
Co-Founder & CEO, iDeed Pty Ltd
Justin is Co-Founder and CEO of iDeed, operators of ARCaml - an AML/CTF compliance platform built for Australian designated service providers.
Connect on LinkedIn