AML/CTF Tranche 2 due diligence Current

Running customer due diligence under Tranche 2

A practical walkthrough for firms newly regulated under Tranche 2.

Customer due diligence means collecting, verifying and recording identity information for clients before providing a designated service, and periodically after that. This guide walks through the practical steps. It is general information, not legal or compliance advice.

Action plan

1 Collect and verify client identity Collect identity evidence for individuals, companies and trusts, and verify it against a reliable source.

Before providing a designated service, collect identity evidence for the client, whether an individual, company or trust, and verify it against a reliable and independent source. Vertical Flows can structure the intake checklist, evidence upload and review trail. Your firm makes the final risk and compliance decision.

  • Collect identity evidence for individuals, companies and trusts
  • Verify documents against a reliable and independent source
  • Record what was collected, when, and who reviewed it

Done when: Every in-scope client has a completed, reviewed customer due diligence record

See how structured intake and review works
2 Identify beneficial owners For company, trust and other entity clients, identify who ultimately owns or controls them.

For non-individual clients, AML/CTF obligations generally require identifying beneficial owners: the people who ultimately own, control or benefit from the entity. Exact thresholds are set out in AUSTRAC's rules. This is evidence to collect and keep, not a determination Vertical Flows makes for you.

  • Identify individuals with a significant ownership or control interest
  • Collect supporting evidence for each beneficial owner
  • Refresh the record when ownership changes

Done when: Beneficial ownership evidence is on file for every in-scope entity client

3 Collect source of funds and source of wealth information Understand where a client's funds and overall wealth come from, especially for higher-risk matters.

Source-of-funds and source-of-wealth information helps your firm assess whether a transaction or client relationship is consistent with what you know about them. Vertical Flows can structure the request and evidence trail. Assessing risk stays with your firm.

  • Ask for a plain-English explanation of the funds involved in the matter
  • Collect supporting evidence where the risk assessment calls for it
  • Escalate anything inconsistent or unclear to your compliance officer

Done when: Source-of-funds and source-of-wealth evidence is recorded for higher-risk matters

4 Keep due diligence current AML/CTF obligations continue after onboarding, not just at the start of a matter.

Ongoing customer due diligence means reviewing and refreshing client information as circumstances change, and monitoring for anything inconsistent with what you know about a client. This is a continuing obligation, not a one-off intake step.

  • Set a review cadence for higher-risk clients
  • Refresh identity and ownership evidence when it goes stale
  • Record what changed and why at each review

Done when: A documented review cadence exists and is being followed