Identify the legal structure
Non-profit describes a purpose or operating model. It does not, by itself, identify the legal form used for customer due diligence.
An incorporated association is a body corporate. An unincorporated association has its own customer classification. A charity may instead use a company or trust.
The legal form determines the applicable information requirements. Charity registration and the organisation’s name can help the enquiry, but do not replace it.
Sources: AUSTRAC: Customer identity; Nature and purpose of the business relationship; Federal Register of Legislation: Sections 6-2 and 6-3.
Evidence for the association
For an Australian service, section 6-2 specifies minimum information for a body corporate or unincorporated association. It includes names, any identifier, addresses, existence and governing powers.
It also requires the names of those with primary responsibility for governance and executive decisions. A constitution or rules can help explain these powers. Include a director identification number where applicable.
An association might have no ABN. The unique identifier requirement applies if one has been given. Lack of an ABN is not, by itself, proof that the organisation does not exist.
Sources: Federal Register of Legislation: Section 6-2(1) and (2); AUSTRAC: Customer identity; Nature and purpose; Persons acting on behalf of the customer.
Control without share capital
Collect information about ownership and control. An association without shareholders can still have people who control its financial and operating decisions.
Do not assume that every member is a beneficial owner. Examine the governing rules and actual powers. The general ownership and control article explains the legal tests.
Rules section 6-8 distinguishes inability to identify beneficial owners from establishing that none exist. The required steps, records and chief executive identification differ. A committee list alone does not settle this.
Sources: Federal Register of Legislation: Sections 6-2(3) and 6-8; AUSTRAC: Beneficial ownership; Control; Determining ownership and control.
- Purpose
A non-profit purpose does not determine legal form.
- Legal form
Use the requirements for the actual association, company, trust or other structure.
- Control
Examine who controls decisions, including where there are no shareholders.
Purpose, legal form and control answer different questions
A charitable purpose does not remove CDD. The actual structure and powers determine which evidence is relevant.
Separate evidence questions. An answer to one does not settle the others.
Purpose, risk and modified measures
Establish the nature and purpose of the relationship or occasional transaction. A charitable purpose does not remove that duty.
Simplified measures require their stated conditions, including the applicable low-risk assessment. Section 6-18 includes certain strata or community title associations. It does not give all non-profits a blanket exception.
The business must also address the relevant representatives and screening requirements. The association’s name does not establish a person’s authority to act.
Sources: Federal Register of Legislation: Sections 6-9, 6-17 to 6-19; AUSTRAC: Customer identity; Nature and purpose; Persons acting on behalf of the customer.
A club changes its treasurer
A fictional unincorporated sports club appoints a new treasurer who requests a designated service. The club gives the practice its rules and the appointment record.
The practice examines the club’s identity, decision powers and the treasurer’s authority. It also records why the club needs the service. The treasurer’s title alone does not complete CDD.
Source: AUSTRAC: Customer identity; Nature and purpose; Persons acting on behalf of the customer.