How real estate professionals will need to comply with Australia’s Tranche 2 AML/CTF laws
Tranche 2 of Australia's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms significantly impact real estate agents, buyers’ agents, and property developers. They now fall into a category known as Tranche 2 reporting entities that provide certain designated services.
Some of the designated services offered by real estate professionals include:
- Brokering the sale, purchase or transfer of real estate on behalf of a customer (typical seller’s and buyer’s agent services).
- Selling or transferring real estate without an independent real estate agent (property developers and other businesses who sell house and land packages, apartments off the plan, and blocks of vacant land in new subdivisions).
- Assisting a person with planning or executing a transaction to buy, sell, or transfer real estate. This includes acting on someone’s behalf.
If you offer any of these designated services or others not listed, you will have compliance obligations. If so, you need to meet two key deadlines:
- Enrol with AUSTRAC (Australian Transaction Reports and Analysis Centre) by 31 March 2026.
- Comply with all Tranche 2 obligations by 1 July 2026.
If you’re impacted and need advice, talk to our team today.
Tranche 2 AML/CTF requirements for real estate professionals
AUSTRAC outlines the obligations that real estate agents, buyers’ agents, and property developers will need to comply with. Here’s a summary:
1. Appoint an AML/CTF Compliance Officer: This role must be at management level and it’s responsible for making sure your business complies with its AML/CTF obligations. If you’re a sole trader or small business, you can get help or advice from an independent adviser like One AML, but you remain responsible for AML/CTF compliance.
2. Develop an AML/CTF Program: All reporting entities must develop, implement, and maintain a tailored AML/CTF Policy and Risk Assessment.
3. Conduct staff AML/CTF training: All reporting entities, including real estate professionals, must implement AML/CTF risk awareness training for employees who provide designated services and whose roles pose a money laundering (ML) or terrorism financing (TF) risk.
4. Enrol with AUSTRAC: Reporting entities must enrol from 31 March 2026 and ensure their information remains up to date. Confirm that you need to enrol with AUSTRAC, then get in touch with our team.
5. Perform Customer Due Diligence (CDD) and Know Your Customer (KYC): When onboarding clients, real estate professionals must have processes in place to ensure they understand who their customers are and can effectively manage money laundering (ML) and terrorism financing (TF) risks.
6. Monitor and report certain activities to AUSTRAC: With Tranche 2, real estate professionals will be obligated to report suspicious transactions to AUSTRAC. This requires a better understanding of red flags and indicators of illegal activities, as well as being able to identify and report suspicious transactions promptly.
7. Keep AML/CTF records: You must make and maintain accurate and complete records for at least seven years. These provide evidence of your due diligence, risk management practices, and compliance with AML/CTF obligations.
8. Maintain ongoing compliance and training: You are expected to set up and maintain robust AML/CTF compliance programs tailored to your specific business risks. You’re also required to provide regular employee training on AML awareness and reporting obligations.
9. Conduct independent AML/CTF evaluations: These are required every three years to assess the effectiveness of your AML/CTF program. This will help identify any weaknesses or deficiencies in your program and make sure it remains up-to-date and aligned with regulatory requirements.
See our Tranche 2 compliance timeline and roadmap
Real estate professionals as gatekeepers
Australia is the only OECD country that hasn’t yet fully implemented AML/CTF laws for Tranche 2 entities – designated non-financial businesses and professions (DNFBPs) such as lawyers, accountants, and real estate agents.
Historical cases highlight the vulnerability of Australia’s real estate sector to financial crime, with one case netting nine people and seizing multi-millions of dollars worth of Sydney homes, cryptocurrency, and luxury items. Aside from luxury goods and cars, criminals also hid their illicit funds in a property portfolio that included 20 Sydney addresses and a $47m block of land.
The Tranche 2 measures aim to reduce the risk of money laundering associated with foreign investment in the Australian property market. The increased scrutiny and transparency are likely to enhance market stability and build confidence by ensuring a level playing field and deterring illicit capital flows.
The new AML/CTF rules will bolster Australia’s reputation as a safe and secure destination for real estate investment and are likely to attract more international investors to the local market and build confidence among local property investors.
Red flags for Tranche 2 entities
Under Australia's Tranche 2 AML/CTF reforms, real estate agents, lawyers, and accountants will soon be on the front lines of detecting and reporting suspicious financial activity. These suspicious matters are often referred to as red flags, and they could indicate money laundering (ML) or terrorism financing (TF).
Understanding potential red flags is important for these ‘gatekeeper’ professions to meet their new obligations and avoid facilitating financial crime.
While AUSTRAC is expected to release detailed guidance, a range of red flags based on international standards and existing AML/CTF knowledge can already be identified. Here are some general red flags, based on Financial Action Task Force (FATF) guidance and AUSTRAC:
- Unusual or unexplained large transactions, especially those inconsistent with a client’s known profile or business activity.
- Use of complex ownership structures, such as shell companies, trusts, or offshore accounts, to obscure the source or ownership of funds.
- Reluctance by clients to provide complete information or supporting documentation for transactions or the source of funds.
- Clients seeking to avoid reporting or identification requirements or requesting unusual levels of secrecy.
- Transactions involving high-risk countries or jurisdictions known for weak AML/CTF controls.
- Frequent or unexplained movement of funds between unrelated entities or accounts.
Red flags for real estate professionals
Properties bought and sold repeatedly in short periods (‘flipping’) with unexplained increases in value. This may indicate price manipulation or layering of illicit funds.
- Purchases made with large amounts of cash or unexplained third-party funding.
- Transactions where the buyer or seller is not physically present, or intermediaries are used without clear justification.
- Use of trusts, companies, or nominees to purchase property, especially where beneficial ownership is unclear.
- Unusual settlement arrangements, such as early or late settlements without a commercial rationale.
How One AML can help real estate professionals prepare for the Tranche 2 AML/CTF laws
If your business is affected by Tranche 2, One AML can help you understand and meet your AML/CTF obligations. Get in touch today, as advisory resources are limited and time is short. We provide robust, cost-effective, and seamless solutions.