A Treasury consultation paper has proposed that Australia adopt a phased approach to implementing beneficial ownership disclosure requirements.  

In the first stage, entities regulated under the Corporations Act (public and private companies, Managed Investment Schemes (MIS) and collective investment vehicles (CIVs)) would be required to develop and maintain an up-to-date, publicly accessible register of all natural persons and entities that hold at least 20% of the entity. The register will require a company to trace its ownership through to natural persons, or other entities that are required to have a beneficial ownership register or listed entities.   

This means that:

• to determine ultimate beneficial ownership of an entity, a multitude of ownership registers would need to be examined.  
• Where there are trusts (including SMSFs and small APRA funds but not registrable superannuation entities), the entity would be obliged to take reasonable steps to identify, verify and record all the trust’s beneficiaries on its beneficial ownership register.  

In the second stage, the individual ownership registers would be combined into a central ownership register.  The mechanisms as to how this is achieved and whether individual ultimate beneficial ownership registers will continue to be maintained will be subject to a future consultation.

CA ANZ and CPA Australia (CPAA) do not support the proposal to publicly self-report ownership as it is an onerous compliance burden that will affect over 3 million entities. Each of these entities will be required to comprehend new concepts, identify, and verify individuals and registrable entities at various levels in the ownership chain, create and maintain an ownership register that is different to a share register and create a website to house the register (if they do not already have a website). Even when an entity has successfully completed all of these actions it is questionable whether the register will provide useful information to readers.

There is an alternative way to construct an ultimate beneficial ownership register which could provide more accurate information at a lower compliance cost and would allow existing law enforcement agencies to develop their own ultimate beneficial ownership register. This involves ensuring that the Modernisation of Business Registers program meets its objectives and has better verifiable information that can be used by the relevant government authorities (such as AUSTRAC and the Serious Financial Crime Taskforce).  

CA ANZ and CPAA do not support the beneficial ownership register becoming public. A clear, strong rationale for public disclosure is needed to counter the significant concerns members have about a public register releasing private information that could be used for fraudulent purposes – a matter that the recent Medicare and Optus cyber hacks have highlighted. Especially as the burden of dealing with such fraudulent behaviour falls heavily on the victim and can have devasting consequences.