A complete guide to AML compliance for real estate professionals under Australia’s Tranche 2 reforms
Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms, commonly referred to as Tranche 2 reforms, will extend regulatory obligations to a number of professional service sectors that have historically been outside the AML framework.
One of the most significant sectors affected by these reforms is the real estate industry.
From 1 July 2026, real estate professionals who provide certain designated services will be required to comply with AML/CTF obligations administered by AUSTRAC (Australian Transaction Reports and Analysis Centre).
The Tranche 2 reforms are expected to apply primarily to real estate professionals who facilitate property transactions for clients. This may include residential real estate agents, commercial real estate agents, buyer’s agents and property brokers involved in transaction facilitation.
The reforms are focused on businesses that play an active role in arranging or facilitating property transactions rather than individuals simply buying or selling their own property.
These reforms represent a significant shift for the real estate sector. Many businesses that have never previously been subject to financial crime compliance obligations will need to implement systems designed to identify, assess and manage money laundering and terrorism financing risks.
Businesses will be able to enrol with AUSTRAC from 31 March 2026, and those providing designated services will need to have AML compliance systems in place by 1 July 2026.
Further information on the reforms is available from AUSTRAC:
AML/CTF Reform
Real estate transactions have long been recognised internationally as a potential channel for money laundering.
Property transactions often involve:
These characteristics can make real estate an attractive mechanism for criminals seeking to convert illicit funds into legitimate assets.
For example, criminals may attempt to purchase property using funds derived from illegal activity. By holding or selling that property, the funds may appear legitimate within the financial system.
International bodies such as the Financial Action Task Force (FATF) have repeatedly recommended that countries introduce AML obligations for sectors such as real estate agents, lawyers and accountants.
Australia’s Tranche 2 reforms are designed to align the country with these global standards.
AML obligations apply when a business provides a designated service as defined under the AML/CTF Act.
In the context of real estate, designated services may include activities such as:
Where these services are provided, businesses may be required to comply with AML obligations including customer due diligence and transaction monitoring.
It is important for businesses to assess which services they provide and whether those services fall within the definition of a designated service.
Australia’s AML/CTF framework currently applies primarily to financial institutions such as banks, casinos and remittance providers.
The Tranche 2 reforms expand this regime to additional sectors that may facilitate financial transactions or asset transfers.
The sectors expected to be captured include:
The objective of the reforms is to ensure that businesses operating in these sectors implement appropriate safeguards to prevent misuse for financial crime.
Understanding the risks associated with property transactions is a critical component of AML compliance.
The AML/CTF framework operates on a risk-based approach, meaning businesses must identify and manage risks relevant to their operations.
Common money laundering risks in the real estate sector include the following.
Concealed Beneficial Ownership
Criminals may attempt to hide the true ownership of property by using corporate entities or trusts.
For example, a property may be purchased by a company whose shareholders are other companies or trusts, making it difficult to identify the ultimate owner.
This technique may be used to obscure the origin of funds or the identity of individuals involved in illicit activity.
Third-Party Funding
Another common red flag involves deposits or purchase funds being provided by individuals or entities unrelated to the buyer.
For example, a property purchaser may claim to be funding the transaction personally, but the deposit is paid by an overseas company.
Such arrangements may warrant further scrutiny.
Cross-Border Transactions
Funds originating from overseas jurisdictions can present additional risks.
This is particularly the case where the jurisdiction involved has:
Businesses should be aware of the potential risks associated with international funds.
Rapid Property Flipping
Property flipping refers to situations where properties are purchased and sold in rapid succession.
While legitimate in many cases, rapid property transfers may also be used to move funds through the financial system and create the appearance of legitimate capital gains.
Businesses captured under the AML/CTF regime must implement a number of compliance measures designed to detect and prevent financial crime.
These measures typically include the following components.
AUSTRAC Enrolment
Businesses providing designated services must enrol with AUSTRAC as reporting entities.
Enrolment enables AUSTRAC to supervise and regulate compliance with AML obligations.
ML/TF Risk Assessment
Businesses must conduct a Money Laundering and Terrorism Financing (ML/TF) risk assessment.
This assessment considers risks associated with:
The risk assessment forms the foundation of the AML compliance framework.
AML/CTF Compliance Program
Businesses must develop an AML/CTF compliance program outlining policies and procedures designed to manage financial crime risks.
The program typically includes:
AML Compliance Lifecycle
Risk Assessment
↓
AML Compliance Program
↓
Customer Due Diligence
↓
Transaction Monitoring
↓
Suspicious Matter Reporting
↓
Ongoing Compliance Review
Each component of this lifecycle plays an important role in detecting potential financial crime.
Customer Due Diligence (KYC)
Customer Due Diligence (CDD), often referred to as Know Your Customer (KYC), is a core requirement of the AML regime.
CDD ensures that businesses understand who they are dealing with and the nature of the business relationship.
Real estate businesses may need to undertake processes such as:
CDD should generally be completed before providing a designated service.
AUSTRAC guidance on CDD is available here:
Customer Due Diligence (Reform)
Ongoing Monitoring of Transactions
AML compliance also requires businesses to monitor transactions and client behaviour.
Monitoring helps identify unusual patterns that may indicate financial crime.
Examples of potential red flags include:
When unusual activity is identified, businesses should conduct further review.
Suspicious Matter Reporting
Where a business forms a suspicion that a transaction may involve money laundering or terrorism financing, it may be required to submit a Suspicious Matter Report (SMR) to AUSTRAC.
SMRs provide critical financial intelligence used by law enforcement agencies to detect criminal activity.
More information on reporting obligations is available here:
Reporting
Preparing for AML compliance involves a number of practical steps.
Businesses should begin by assessing whether the services they provide fall within the scope of the reforms.
This may involve reviewing:
Businesses should then consider developing AML compliance systems including:
Starting early allows businesses to implement these systems in a structured and manageable way.
Bravishi Advisory works with businesses to translate regulatory requirements into clear operational structures.
Our approach focuses on helping organisations understand their obligations and implement systems that align with their day-to-day business processes.
This includes:
The objective is to ensure businesses are prepared to meet regulatory expectations while maintaining efficient operations.
If your business operates in the real estate sector, understanding the upcoming AML reforms is an important first step.
Bravishi Advisory can assist you in assessing how these reforms apply to your business and developing a structured approach to AML compliance.
If you would like to understand more about the Tranche 2 reforms or discuss your business requirements, please feel free to contact us.
