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AML/CTF obligations for Real Estate Professionals

Designated services offered by

Real Estate Professionals

Under the AML/CTF Amendment Bill 2024, specific real estate services will be designated as covered activities and will be subject to AML/CTF obligations. These services include:

Facilitating transactions that involve the transfer of a beneficial interest in real estate.

Managing client funds or other assets, excluding payments received as fees for professional services.

Conducting or instructing others on conveyancing-related transactions, such as the grant, sale, purchase, disposal, or acquisition of real estate on behalf of a client.

If your business provides any of these services, it will be subject to AML/CTF obligations.

Why is the Real Estate sector

Subject to AML/CTF laws?

Real estate is a common vehicle for money laundering due to its high value, stability, and potential for concealing ownership. Criminals exploit the industry by:

Purchasing properties with illicit funds and later selling them for a profit.

Concealing beneficial ownership, making it difficult to trace the true owners.

Using illicit funds to renovate or otherwise improve properties before resale.

Money Laundering and Terrorism Financing (ML/TF)

Risks in Real Estate

The real estate sector faces significant ML/TF risks, including:

  • Use of third parties to conduct transactions, masking the true buyer or seller
  • Manipulating property values, either inflating or undervaluing properties to move illicit funds
  • Structuring cash payments to avoid detection while purchasing real estate
  • Complex corporate structures and multiple accounts used to obscure ownership and transaction flows
  • Leasing properties to tenants who pay rent with illicit funds
  • Acquiring properties with criminal proceeds to serve as bases for further illegal activity

To comply with the AML/CTF Act by 1 July 2026, real estate businesses must conduct a thorough ML/TF risk assessment to identify, mitigate, and manage risks effectively.

For more information on the ML/TF risks faced by Real Estate Professionals click here.

AML/CTF Programs and Policies

In addition to designing, executing and maintaining a money laundering, terrorism financing and proliferation financing (ML/TF/PF) risk assessment reporting entities are expected to implement AML/CTF policies that are both appropriate and proportionate to the identified risks, in order to mitigate and manage these risks.

AML/CTF

Programs and Policies

In addition to designing, executing and maintaining a money laundering, terrorism financing and proliferation financing (ML/TF/PF) risk assessment reporting entities are expected to implement AML/CTF policies that are both appropriate and proportionate to the identified risks, in order to mitigate and manage these risks.

The diagram below outlines at a high-level the other key pillars of an AML/CTF Program:

In addition to designing, executing and maintaining a money laundering, terrorism financing and proliferation financing (ML/TF/PF) risk assessment reporting entities are expected to implement AML/CTF policies that are both appropriate and proportionate to the identified risks, in order to mitigate and manage these risks.

AI AML-Value-Chain A4 final
HOW REAL ESTATE PROFESSIONALS CAN MEET THEIR

AML/CTF Obligations

To meet AML/CTF obligations, businesses in the real estate sector must:

Conduct an enterprise-wide ML/TF/PF Risk Assessment considering factors such as customer risks, product and services risks, channel risks, transaction risks, and geographical risks

Develop and maintain AML/CTF policies, outlining compliance measures and risk mitigation strategies

Conduct Customer Due Diligence (CDD), verifying customer identities before transactions. High-risk clients require Enhanced Due Diligence (EDD)

Conduct Know Your Employee (KYE) checks, by performing employment and criminal history background checks and enhanced controls for employees occupying key risk roles

Provide initial and ongoing AML/CTF training to employees (and contractors) to ensure they understand their obligations and can identify ML/TF risks and escalate as appropriate

Monitor transactions to detect unusual activity or suspicious patterns indicative of money laundering or terrorism financing (or have oversight of financial institutions conducting on their behalf)

Conduct regulatory reporting to AUSTRAC where required

Conduct an independent review of AML/CTF policies at least every 3-years

Maintain records of all customer due diligence, reports, and related correspondence for at least seven years

These measures are critical to safeguarding the real estate sector from criminal exploitation and ensuring compliance with Australia’s strengthened AML/CTF framework.

Note: The AML/CTF Rules are being developed by AUSTRAC and are under a consultation process and are subject to change.

In focus

Blogs

What is the role of Real Estate Agents in preventing money laundering in high-value transactions?

February 5, 2025

Case Studies: How organised criminals have exploited real estate agents and property developers to launder the proceeds of their crimes and how you can prevent this happening in your business

February 4, 2025

How do organised criminals exploit real estate professionals to launder the proceeds of their crimes and what can you do to prevent this happening in your business?

February 3, 2025

Anti-Money Laundering 101: What do Australian Real Estate Professionals need to know about the AML/CTF Amendment Act 2024 and how can they start to prepare to comply?

February 2, 2025

In focus

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AML/CTF compliance for real estate professionals.

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Case Studies_ How organised criminals have exploited real estate agents and property developers to launder the proceeds of their crimes and how YOU CAN prevent this happening in your business

Case Studies: How organised criminals have exploited real estate agents and property developers to launder the proceeds of their crimes and how you can prevent this happening in your business

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