This article explains two important AML onboarding behaviors within the ChangeGPS Engage module.
Firstly, when onboarding a pre-commencement client, Engage deliberately bypasses the Know Your Business (KYB) and Customer Due Diligence (CDD) processes. Secondly, for clients receiving an AUSTRAC-designated service, all Ultimate Beneficial Owners (UBOs) must be entered during Step 1 of the onboarding process. If any UBOs are omitted, Know Your Customer (KYC) verification will not be completed for the associated company, trust, or self-managed super fund (SMSF).
Understanding these behaviors can help prevent one of the most common onboarding issues: an entity appearing to be successfully onboarded without having completed the required identity verification.
Key terms used in this article
AML: Anti-Money Laundering. The compliance obligations Engage helps your firm meet.
AUSTRAC: the Australian Transaction Reports and Analysis Centre, Australia's AML/CTF regulator.
Designated service: A service listed in AUSTRAC's Table 6 that triggers AML/CTF obligations for your firm under the Tranche 2 reforms.
Pre-commencement client: A client to whom your firm provided a designated service before the AML/CTF obligations commenced (before 1 July 2026). These relationships are grandfathered to ongoing monitoring.
KYB; Know Your Business. Verification of an organisation (company, trust, or SMSF) via ABN, ASIC, and beneficial ownership checks.
KYC: Know Your Customer. Identity verification of a natural person (an individual).
CDD: Customer Due Diligence. The risk assessment performed on a client. ECDD is Enhanced Customer Due Diligence, required for designated services.
UBO: Ultimate Beneficial Owner. Any individual who ultimately owns or controls 25% or more of an entity.
Before you begin
Before onboarding a client in Engage, make sure you have:
Confirmed whether the client relationship is pre-commencement (a designated service was provided before 1 July 2026) or a new designated service.
The details of the entity being onboarded (company, trust, or SMSF), including its ABN.
The identity details of every Ultimate Beneficial Owner (UBO) — that is, each individual who owns or controls 25% or more of the entity. For trusts and SMSFs this includes trustees, appointors, and beneficial owners.
How Engage treats a pre-commencement client
When a client is marked as pre-commencement in Engage, the system automatically bypasses both Know Your Business (KYB) and Customer Due Diligence (CDD). This is expected behavior and does not indicate an issue with the onboarding process.
This occurs because pre-commencement relationships are considered grandfathered under the AML/CTF Tranche 2 framework. Where your firm was already providing the designated service before 1 July 2026, full onboarding due diligence is not required. Instead, the client relationship is transitioned into ongoing monitoring, with KYB and CDD requirements intentionally omitted during onboarding.
What this means in practice:
You will not be prompted to complete Business Verification (KYB) at Step 3 for a pre-commencement client.
You will not be prompted to complete the Risk Assessment (CDD) at Step 4 for a pre-commencement client.
The client is still recorded in Engage and remains subject to ongoing monitoring for future designated services or changes.
If you expected to complete KYB or CDD and those steps did not appear, check whether the client has been flagged as pre-commencement. If the relationship is in fact a new designated service, remove the pre-commencement flag so the full onboarding steps appear.
How Engage treats an AUSTRAC designated service client
When you onboard a client that receives an AUSTRAC designated service, Engage requires Enhanced Customer Due Diligence (ECDD), which includes identity verification of the entity's beneficial owners. Because a company, trust, or SMSF is not itself a natural person, Engage performs Know Your Customer (KYC) verification against the individuals you identify as Ultimate Beneficial Owners (UBOs).
This is the critical point: you must enter all of the UBOs at Step 1 (Client and Services). If you do not enter the UBOs, Engage has no individuals to verify, and the KYC verification for the company, trust, or SMSF is not performed.
Step-by-step: onboarding a designated-service client correctly
Open the client in Engage and go to Step 1: Client and Services.
Select the designated service the client receives. Engage displays the AUSTRAC Designated Services banner confirming that Enhanced CDD applies.
Add the entity being onboarded (the company, trust, or SMSF).
Enter every Ultimate Beneficial Owner (UBO) for that entity — each individual who owns or controls 25% or more. Do this before you leave Step 1.
Proceed to Step 2: Identity Verification (KYC). Engage now runs KYC against each UBO you entered.
Continue to Step 3: Business Verification (KYB) and Step 4: Risk Assessment (CDD) to complete Enhanced CDD.
If you complete Step 1 without entering any UBOs, Steps 2 to 4 have no individuals to work with, and the entity's KYC will be incomplete even though the client appears onboarded.
Tips and best practices
Enter UBOs at Step 1, not later. UBOs added after you have moved past Step 1 may not flow into the KYC verification for the entity.
Identify UBOs using the 25% ownership or control threshold. For discretionary trusts and SMSFs, this includes trustees, appointors, and beneficial owners, not just named shareholders.
Check the AUSTRAC Designated Services banner on Step 1. If it appears, Enhanced CDD applies and UBO entry is mandatory.
Confirm the pre-commencement status of every client. Marking a genuinely new designated service as pre-commencement will incorrectly skip KYB and CDD.
Common issues
The KYC for my company, trust, or SMSF was not performed.
This almost always happens because no Ultimate Beneficial Owners (UBOs) were entered at Step 1. Engage verifies the individuals behind the entity, not the entity itself, so with no UBOs there is nothing to verify. Return to Step 1, add all UBOs at the 25% threshold, and re-run identity verification at Step 2.
KYB and CDD steps did not appear for my client.
If Business Verification (KYB) in Step 3 and the Risk Assessment (CDD) in Step 4 do not appear, the client is most likely marked as a pre-commencement client. In this scenario, Engage intentionally skips both the KYB and CDD steps. If the client is actually establishing a new designated-service relationship, remove the pre-commencement flag and the missing steps will become available
I added a UBO but KYC still shows incomplete.
Before proceeding, ensure all Ultimate Beneficial Owners (UBOs) who meet the 25% ownership threshold have been added in Step 1. Engage only performs KYC verification for the UBOs entered at this stage, so an incomplete UBO list will result in incomplete KYC verification.