AML/CTF reforms: their impact on the property sector

Who will be caught by these changes?

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) currently applies to entities such as authorised deposit-taking institutions (like banks), bullion traders and gambling services. From 1 July 2026, Schedule 3 of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) extends the anti-money laundering and counter terrorism financing obligations to additional ‘designated services’. These will include entities (known as Tranche 2 entities):

• selling or transferring ‘real estate’ in the course of carrying on a business of selling real estate, where the sale or transfer is not brokered by an independent real estate agent
• brokering the sale, purchase or transfer of ‘real estate’ on behalf of a buyer, seller, transferee or transferor in the course of carrying on a business.

What is real estate?

The definition of the term ‘real estate’ includes any of the following interests in Australian land:

• a fee simple interest
• a leasehold interest
• a land use entitlement (which means an entitlement to occupy land conferred through ownership of shares in a company, or units in a unit trust scheme, or a combination of a shareholding or ownership of units together with a lease or licence).

‘Real estate’ also extends to an interest, estate, right or entitlement in land in a foreign country equivalent to one of the above interests or that otherwise confers ownership rights. An entity would only have obligations under the AML/CTF Act if the designated service has a geographical link to Australia.

AUSTRAC, which is the regulator in relation to the AML/CTF Act, has provided the following guidance in this regard:

• AUSTRAC considers a ‘broker’ to be a person who acts as an intermediary or agent for another person for consideration. This would capture (for instance) both buyers’ and sellers’ agents.
• Selling or transferring real estate without an independent real estate agent as part of a business selling real estate is a designated service, such as where a property developer or other business sells the real estate with their own in-house agents or sales or marketing employees, rather than engaging an external agency for this work.
• Examples of entities that are caught are property developers and other businesses who sell any of the following without engaging a real estate agent:
  • house and land packages
  • apartments off the plan
  • blocks of vacant land in new subdivisions.

What is not real estate?

The following interests are excluded:

• a leasehold interest under a lease for a term (excluding options for further terms) of 30 years or less
• the interest of a mortgagee
• incorporeal hereditaments (such as easements or profits a prendre)
• any other interest, estate, right or entitlement in land in a foreign country that is equivalent to an interest mentioned
• an interest prescribed by the regulations.

Incidental sales of real estate by a business and private sales of residential property are not caught where, for instance, an individual runs their business on premises that they own and negotiates and directly sells their premises to a buyer – on the basis that those sales are not carried out as part of a business of selling real estate.

What are you required to do if you are caught?

By 1 July 2026, AUSTRAC expects Tranche 2 entities to:

• enrol with AUSTRAC
• design and implement an AML/CTF program
• appoint an AML/CTF compliance officer
• implement staff training on the program, internal processes and money laundering/terrorism financing risks
• be ready to report suspicious activity
• be maintaining appropriate record-keeping
• be ready to conduct initial and ongoing customer due diligence.

What is initial customer due diligence?

Initial customer due diligence (CDD) will involve taking the necessary steps to know a customer before the entity provides them with a designated service. This will include reasonably establishing:

• the identity of the customer
• the identity of any person on whose behalf the customer is receiving a designated service (such as a beneficiary of a trust or foreign equivalent)
• the identity of any person acting on behalf of the customer, and their authority to act
• if the customer isn’t an individual, the identity of any beneficial owners of the customer
• whether the customer, any beneficial owners of the customer, any person on whose behalf the customer is receiving the designated service or any person acting on behalf of the customer is a politically exposed person (PEP), or designated for targeted financial sanctions
• the nature and purpose of the business relationship or occasional transaction
• the source of funds and source of wealth of foreign PEPs, high-risk domestic or international organisation PEPs
• if a designated services is required to undertake enhanced CDD, the customer’s source of funds and source of wealth, if this is relevant to the nature of the customer’s ML/TF risk.

AUSTRAC guidance

AUSTRAC has indicated that:

• If the service is selling or transferring real estate in the course of carrying on a business of selling real estate, where the sale or transfer is not brokered by an independent real estate agent:
  • the customer is deemed to be the buyer or transferee
  • an entity commences providing a designated service when there is a commitment to sell or transfer the property (e.g. when an agreement to sell or transfer the property is entered).
• If the service is brokering the sale, purchase or transfer of real estate on behalf of a buyer, seller, transferee or transferor in the course of carrying on a business:
  • the customer is deemed to be both:
    • the seller or transferor; and
    • the buyer or transferee
  • a person acting as a seller’s agent starts providing a designated service to a seller or transferor when an agreement to broker the sale or transfer of a property is signed
  • a person acting as a buyer’s agent starts providing a designated service to a buyer or transferee when an agreement to find or identify a property is signed.
• In the case of an auction, initial CDD may be able to be delayed where the short time between the end of the auction and signing of the sale contract is not sufficient for that CDD to be completed.

Customer due diligence arrangement

In a property transaction, it is common for several participants – such as property developers, real estate agents or solicitors –to need to conduct initial CDD on the same parties. In these circumstances, it may be possible (where appropriate) for a CDD arrangement to be put in place.

A CDD arrangement:

• allows a designated service to rely on the applicable customer identification procedures (ACIP) carried out by another reporting entity regulated under the AML/CTF Act
• would need to be approved by an entity’s governing body or senior managing official and appropriately documented.

What is the timeline?

The timeline of key relevant dates for Tranche 2 entities is as follows:

• end of January 2026 → finalisation of sector-specific guidance for newly regulated sectors
• 31 March 2026 → enrolment opens for newly regulated sectors
• 1 July 2026 → AML/CTF reforms become effective for Tranche 2 entities
• 29 July 2026 → deadline to enrol as a reporting entity.

How can we assist?

Cooper Grace Ward is pleased to assist our clients to be in a position to achieve AML/CTF readiness. This includes:

• policy and framework development – drafting, reviewing and updating AML/CTF policies, procedures and governance
• training and capacity building – delivering targeted training on AML obligations, risk indicators and reporting procedures
• implementation support – advising on the integration of AML controls into existing workflows, such as customer onboarding processes and record-keeping procedures.

If you would like assistance or wish to discuss any of the matters contained in this article, please contact Phil Vickery or a member of our corporate advisory team.