From 1 July 2026, real estate businesses will be required to comply with AML/CTF laws under Tranche 2 reforms
Australia's economy continues to be exploited by serious and organised crime. These criminals exploit services provided by legitimate businesses to help disguise the illicit origins of their funds. Laundered funds are reinvested in further criminal activity, including child exploitation, drug and sex trafficking, scams, fraud, terrorism and the proliferation of weapons of mass destruction.
AUSTRAC’s Money Laundering in Australia National Risk Assessment 2024 (ML NRA) identified that businesses are regularly exploited by money laundering networks. These networks use business’ services to disguise the criminal origins of their funds and reinvest them in further criminal activity.
The ML NRA identified persistent exploitation of:
- channels historically used to launder funds, including banks, remitters and casinos
- high-value assets such as luxury watches, precious stones and real estate
- services provided by professional service providers to help establish complex business structures and associated banking arrangements that criminals use to launder and conceal proceeds of crime.
The ML NRA also found that:
- domestic real estate generated a very high risk of money laundering, while real estate agents posed a medium risk, noting that the real estate sector is a widely exploited asset type for money laundering in Australia
- luxury goods such as jewellery pose a high risk of money laundering, as they are an effective and low-cost channel to store and transfer criminal proceeds
- lawyers and accountants, along with companies and legal structures, pose a high risk of money laundering, as they can facilitate money laundering by obfuscating the source of illicit funds and beneficial ownership
- cash continues to pose a very high risk of money laundering, remaining a mainstay of money laundering in Australia and abroad.
To keep up with an ever-changing criminal environment, the Australian Government has recently reformed Australia's Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regime includes the AML/CTF Act, the Anti-Money Laundering and Counter-Terrorism Financing Rules 2007 (the Rules) and associated regulations. It is a central part of their efforts to prevent criminals from enjoying the profits of their illegal activity and stopping funds from falling into the hands of terrorists.
On 29 November 2024, the Parliament of Australia passed the AML/CTF Amendment Bill 2024 (the Bill), amending the AML/CTF Act. The new laws reform Australia's AML/CTF regime to ensure it continues to effectively deter, detect and disrupt money laundering, terrorism financing and proliferation financing. They also ensure these laws meet international standards set by the Financial Action Task Force, the global financial crime watchdog and standard-setter.
Key changes under the new laws
Regulation of high-risk services
The new laws will expand AUSTRAC’s regulation into new industries that are recognised domestically and globally as high-risk for money laundering exploitation.
This includes certain designated services that are typically provided by the following businesses (Tranche 2 businesses):
- real estate professionals such as real estate agents - buyers agents and property developers
- dealers in precious stones, metals and product
- professional service providers such as lawyers, conveyancers, accountants, and trust and company service providers.
These new laws will not apply until 1 July 2026 for tranche two entities that provide new designated services. These entities will be able to enrol with AUSTRAC from 31 March 2026. This is to allow time for newly regulated entities to understand and prepare for their new AML/CTF obligations.
You can view a summary of AML/CTF obligations for new regulated entities here.
You can learn about real estate services reforms here .
AML/CTF Obligations and Risk Management Across Your Business
Once your business is enrolled, you become a ‘reporting entity’ under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). This means you must be ready to meet your ongoing obligations under the Act, including:
- Having developed an AML/CTF program to manage compliance – or using a compliance software program such as AgentSafe, with modifications scheduled for implementation in December 2025.
- Carrying out risk assessments using manual processes or approved software.
- Having appointed a compliance officer to oversee AML/CTF responsibilities.
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Collecting and verifying key client details before providing services – often referred to as Know Your Customer (KYC) information. This may include taking verified copies of identification documents or using a credit reporting body (CRB) to verify details.
For identity verification procedures applicable to NSW agents, refer to pages 19–20 of the Supervision Guidelines. However, these guidelines are expected to be updated to reflect the risk-based assessment approach applied under the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) legislation. - Reporting certain types of transactions, including those above a monetary threshold, international transfers, information about carrying or shipping physical currency, and any suspicious transactions or interactions.
- Keeping and securely storing records showing your AML/CTF activity.
- Submitting compliance reports to AUSTRAC as required under the AML/CTF Act.
- Paying an industry levy if your business earns over the threshold.
Extending AML/CTF Beyond KYC – The Need to “Know Your Property” (KYP)
An effective AML/CTF program must conform with both Part A and Part B requirements under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to ensure it addresses all relevant risks and remains audit-ready.
Part A of an AML/CTF program covers the broader risks beyond just buyers and sellers, and includes the process for identifying, mitigating, and managing the overall risks of money laundering and terrorism financing that a business may face. This can include risks associated with properties and all parties connected to them, including tenants, landlords, lot owners, tradespeople, and buyers and sellers themselves, as part of the business’s overall risk assessment and management plan.
Part B focuses on the customer due diligence (CDD) procedures, ensuring that identity verification, beneficial ownership checks, and ongoing monitoring are performed effectively.
Together, these parts form the foundation of a compliant AML/CTF system. For real estate and property-related businesses, the risk environment extends beyond traditional customer relationships.
Your AML/CTF program must therefore address broader operational risks associated with properties, including:
- Buyers and sellers – who may hide repairs and maintenance, provide inaccurate information on material fact checklists, or attempt to deter work health and safety inspections to conceal suspicious activity.
- Landlords, tenants, and lot owners – whose activities could be exploited for money laundering or other criminal purposes.
- Tradespeople and contractors – who should meet safety, insurance, and registration requirements to prevent criminal infiltration.
This comprehensive approach is known as Know Your Property (KYP) – ensuring that all properties and associated parties are appropriately identified, verified, and monitored.
By aligning your KYC and KYP practices with the Part A and Part B obligations, your business can demonstrate a comprehensive, risk-based AML/CTF framework that withstands independent audit scrutiny and ensures readiness for Tranche 2 compliance.
Integrating Safety and Compliance in Risk Assessment
Before assessing money laundering or terrorism financing risks, your due diligence process should also include Work Health and Safety (WHS) inspections to protect the health, safety, and welfare of workers and visitors.
As part of this process, the agent should conduct a property inspection walk-through, which can reveal any discrepancies between what the owner has provided in the property safety requirements checklist and the actual condition of the property. This helps identify potential risks linked to suspicious activity and ensures the agency and agent are meeting their obligations as a Person Conducting a Business or Undertaking (PCBU) under the Work Health and Safety legislation.
Criminal activity on a property can create significant hazards – for example, drug manufacturing or hydroponic cannabis operations may lead to fires, explosions, or contamination.
Owners should complete a property compliance checklist before entry or inspection, confirming the safety and legality of the premises and declaring that there are no signs of suspicious activity. The combination of the checklist and the agent’s inspection walk-through forms a key component of both AML/CTF and WHS risk management.
Future Integration with AgentSafe
AgentSafe is consulting with software developers and AUSTRAC on integrating the following due diligence and reporting measures into its compliance platform:
- AML/CTF Seller Due Diligence – undertaken prior to entering into an agency agreement.
- AML/CTF Buyer Due Diligence – includes initial identification verification before providing services, followed by further due diligence after the exchange of contracts to assess transaction and property-related risks.
- AML/CTF Landlord Due Diligence – ensuring landlords are appropriately verified and monitored to prevent misuse of property holdings for money laundering.
- AML/CTF Tenant Due Diligence – confirming tenants’ identities and risk profile to detect high-risk activity or suspicious funds.
- AML/CTF Lot Owner Due Diligence – verifying lot owners and assessing associated risk as part of the property compliance framework.
- Compliance Reporting – including direct access to AUSTRAC’s online portal for reporting certain transactions and suspicious matters.
To ensure all staff understand their role within the AML/CTF framework, AgentSafe will introduce these features by December 2025 or early January 2026, enabling a full rollout of staff training and operational integration so businesses are fully prepared for compliance under the new Tranche 2 reforms.
As a Tranche 2 business under Australia's Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), it's essential to proactively prepare for the upcoming regulatory changes. Here's a recommended timeline to ensure full compliance:
Immediate Actions (March 2025 - May 2025):
• Stay Informed: Regularly review AUSTRAC’s communications for updates on the AML/CTF Rules and guidance materials.
• Assess Current Compliance: Evaluate your existing AML/CTF measures to identify gaps relative to the forthcoming requirements.
• Engage with AUSTRAC: Participate in public consultations on draft guidance and rules to provide feedback and gain clarity (now closed)
• Develop or Revise AML/CTF Program: Create a tailored AML/CTF program that addresses your business’s specific risks and complies with the anticipated regulations.
• Employee Training: Initiate training sessions to ensure all staff understand their roles in the AML/CTF framework.
Mid-Term Actions (June 2025 - December 2025):
• Implement Enhanced Due Diligence Procedures: Strengthen customer verification processes, especially for high-risk clients.
• Update Internal Policies: Ensure all internal policies align with the new AML/CTF obligations.
Read AUSTRAC’s Statement of Regulatory Expectations Now (effective 4/07/2025)
Final Preparations (January 2026 - March 2026):
• Finalise AUSTRAC Enrolment: Complete your enrolment with AUSTRAC from 31 March 2026.
• Conduct Mock Audits: Perform internal audits to test the effectiveness of your AML/CTF measures.
• Compliance Deadline: The new Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) obligations will apply to Tranche 2 businesses from July 1, 2026.
*By initiating your compliance efforts well ahead of the deadlines, you position your business to meet the new AML/CTF obligations effectively, thereby avoiding potential penalties and ensuring uninterrupted service provision.