AML/CTF in the Real Estate Industry is set to come into force for the real estate sector on 1st July 2026.
WHY WE NEED YOUR HELP & COOPERATION?
Anti-Money Laundering and Counter Terrorism Finance AML/CTF in the Real Estate Industry is set to come into force for the real estate sector on 1st July 2026.
Laundered money stems from the proceeds of crime, such as corruption, drug, human trafficking, and child exploitation. It is often linked to organised criminal groups, both in the process of laundering the money and in the groups seeking to have their illicit funds appear legitimate.
Terrorism financing is where individuals seek to provide finance to terrorist groups, often moving the money through legitimate financial mechanisms. Both are posing serious threats to financial integrity, national security and public trust.
Regulators have responded by expanding the scope and sophistication of AML/CTF requirements and identified the real estate sector as being more frequently used to launder large sums of money, and noted their appeal to larger criminal syndicates and considered a safe haven for such an act, offering high returns. Criminals can easily “park” large amounts of illicit funds in property, then reinvest them as property can generate legitimate wealth, effectively masking the illicit origins of the funds.
The Australian Institute of Criminology (AIC) can see the Real estate professionals are in a UNIQUE position to detect suspicious behaviour during property transactions, such as
- Unusual cash payments,
- Complex ownership structures, or
- Clients purchasing properties significantly above market value.
By conducting proper
- Customer due diligence (CDD),
- monitoring for red flags, and
- reporting suspicious activities,
Real Estate agents can play a vital role in disrupting criminal networks and preventing the flow of illicit funds through the property market.
How will it affect us and the sale and purchase of Property?
The new laws will result in real estate practitioners carrying very serious responsibilities. It is clear they will add a significant administrative burden to their businesses,”.
“As a result, there will be a moral & financial impact; some of which will be borne by consumers, and some by real estate businesses. And this where we seek the help, cooperation and full understanding of our clients to be able to perform our job and role professionally”.
- In a way to meet legal obligation and respect privacy laws, Purchasers and Vendors will need to provide sensitive and personal information and to prove who they are, before a property can be listed or bought. As a Real Estate entity, we must conduct Customer Due Diligence (CDD) to:
- identify and verify clients’ identities; identify and verify clients’ identities;
- understand the nature and purpose of customer relationships; and
- apply enhanced procedures for higher-risk customers or transactions.
- Report certain transactions and suspicious activities to AUSTRAC (Australia’s financial intelligence regulator) under the AML/CTF Act.
This may make them (our clients) feel uncomfortable with sharing this information, particularly high net worth individuals, or owners with complex structures.
- Lengthening of the sales cycle/process as there will be some delays to listings and sales while this personal information is obtained and verified. The more complex the ownership structure, the longer the delay. If owners are difficult to contact or uncommunicative, this will also lead to delays.
- Agents will be responsible for due diligence not only on their own clients who are typically the sellers, but from people who are not their direct clients, the buyers.
- If we as real estate professional can’t obtain all the required information from our clients (both buyers and sellers), we won’t be able to sell the property and will lead to cancelled sales/lost business.
