As Australia moves toward implementing Tranche 2 of the AML/CTF legislative reforms, accountants, lawyers, and other designated services will face strengthened obligations to verify and understand the ownership and control structures of their clients. Trusts will be a key focus area.

A practical but critical issue is emerging - many trustees and beneficiaries are unable to locate their original trust deeds or subsequent variations. This poses a direct problem for professionals who will be required to establish the ultimate beneficial ownership (UBO) of trust structures with accuracy and sufficient documentary support.

Why This Matters

Under the expanded AML/CTF regime, advisers will be required to:

• Verify the existence of the trust;
• Confirm the identity of settlors, trustees, appointors, guardians, and beneficiaries (including potential or default beneficiaries where applicable);
• Understand the mechanisms of control in the trust deed; and
• Document the basis on which the Ultimate Beneficial Ownership assessment was made.

Without a complete and accessible trust deed (and any amending deeds), you may not be able to determine:

• Who actually holds the control rights (e.g., appointor powers, removal powers, amendment powers);
• Who qualifies as a beneficiary for AML/CTF purposes; or
• Whether the trust structure has been varied in ways that alter beneficial ownership or control.

This can impede compliance with customer due-diligence obligations once Tranche 2 commences.
Recommended Actions for Advisers

1. Proactively confirm document holdings
   Ask clients to locate and supply their original trust deed and all variations. Many have never been retained properly or have been misplaced over time.
2. Verify completeness
   Ensure the document set includes:
• Original executed trust deed
• All deeds of variation, change of trustee, change of appointor, or supplemental deeds
• Any related company constitutions where corporate trustees are involved
3. Identify gaps early
   If documents are missing, advise clients to begin reconstructive steps now (our partner law practice, Law Central Legal, can assist with this).
4. Review control provisions
   Map out the roles and powers granted under the deed so that beneficial ownership determinations can be made accurately and defensibly under the upcoming requirements.
5. Prepare for documentation expectations
   AML/CTF compliance will require clear records that demonstrate how beneficial owners were identified. Ensuring trust documentation is in order now will reduce compliance risk and delays when the regulations take effect.

The introduction of Tranche 2 will raise the bar for clarity and identification around trust ownership and control. Missing or incomplete trust deeds will significantly complicate compliance. By engaging with clients now to ensure their trust documentation is complete, advisers can reduce risk, avoid delays, and prepare for the extensive due diligence environment that is coming.

For assistance in reconstructing lost trust deeds or rectifying deeds with inaccurate information, please contact Law Central Legal at john.wojtowicz@lawcentrallegal.com.au or call 08 9476 4999.