Introduction
The Australian real estate sector is facing a significant regulatory change, with new anti-money laundering and counter-terrorism financing (AML/CTF) obligations taking effect from 1 July 2026. Under these reforms, real estate agents will be classified as “reporting entities,” requiring them to enrol with AUSTRAC and implement a robust compliance framework to detect and report suspicious activities.
Recent surveys indicate that over 75% of real estate professionals feel unprepared for these new laws, and this guide provides a practical action plan to ensure compliance. It addresses the failures of ordinary people, processes, and systems that leave agencies vulnerable. It outlines the essential steps to build a resilient anti-money laundering program, safeguarding your business from severe penalties and reputational damage.
Understanding Your New AML/CTF Obligations
An Overview of the Tranche 2 Reforms for the Real Estate Sector
Starting from 1 July 2026, the Australian real estate sector will face significant new compliance obligations under the expanded AML/CTF regime. These Tranche 2 reforms reclassify real estate agents, property developers, and conveyancers as “reporting entities,” bringing them under AUSTRAC’s regulatory oversight. This change directly addresses the recognised risk of money laundering and terrorism financing within property transactions.
Under these new laws, any real estate agent providing a designated service, such as brokering the sale or transfer of real estate, must adhere to a strict financing regime. The core requirements of your new compliance obligations include:
| Obligation | Description |
|---|---|
| Developing an AML/CTF Program | You must create and maintain a written, risk-based program tailored to your agency’s specific operations to manage and mitigate risks. |
| Conducting Customer Due Diligence | Before providing a designated service, you must verify the identity of your clients, including any beneficial owners, and understand the source of their funds. |
| Monitoring and Reporting | Your agency must monitor transactions for suspicious activities and report them to AUSTRAC through Suspicious Matter Reports (SMRs). You must also report any physical cash property transaction of A$10,000 or more. |
| Keeping Records | All records related to due diligence, transactions, and your compliance program must be securely maintained for a minimum of seven years. |
Critical Compliance Deadlines Your Agency Must Meet
To ensure your agency is prepared for the new AML/CTF framework, it is crucial to be aware of the key deadlines. AUSTRAC has outlined a clear timeline to help real estate professionals transition into their roles as reporting entities and meet their compliance obligations.
The timeline for these new compliance obligations is staged to allow for adequate preparation. The key dates your agency must adhere to are:
| Date / Deadline | Key Milestone |
|---|---|
| December 2025 | AUSTRAC is scheduled to release a foundational “starter program” to assist new reporting entities. |
| 31 March 2026 | The online enrolment system opens, allowing your real estate agency to begin the mandatory registration process with AUSTRAC. |
| 1 July 2026 | The official commencement date for the new laws, by which your agency must be fully compliant. |
| 29 July 2026 | The deadline to complete your agency’s enrolment with AUSTRAC (28 days after commencement). |
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Why 75% of Real Estate Agents Are Unprepared
People & Culture Failures Involving Inadequate Training & Accountability
A primary reason many real estate professionals are unprepared for their new AML/CTF obligations stems from failures in people and culture. This manifests in several critical ways:
- Lack of dedicated leadership: The absence of a designated AML/CTF Compliance Officer at a senior level means accountability is often diffused, leaving agencies without transparent governance.
- Insufficient staff training: Many team members, from agents to administrative staff, have not received adequate education on:
- Their compliance obligations
- How to identify money laundering red flags
- Proper procedures for escalating suspicious activities
This training gap is frequently compounded by a lack of buy-in from senior management, fostering a culture where AML/CTF compliance is not prioritised.
Process Failures Stemming From Inadequate Due Diligence & Risk Assessments
Even with a willing team, many agencies remain vulnerable due to inadequate or non-existent processes. A critical failure is the lack of a formal, documented AML/CTF program tailored to the agency’s specific risks.
Many real estate agents have not conducted proper risk assessments to understand their vulnerabilities concerning different client types, property transactions, and service delivery channels.
This leads to further process breakdowns, particularly in customer due diligence (CDD). Common process failures include:
| Process Failure | Description |
|---|---|
| Inconsistent Client Verification | Agencies rely on ad-hoc or superficial identity checks instead of consistent protocols for verifying clients and their source of funds. |
| Ignoring Beneficial Ownership | There is a common failure to implement procedures to identify the ultimate beneficial owners of companies or trusts involved in property transactions. |
| Poor Monitoring and Reporting | Many firms lack clear, documented procedures for ongoing transaction monitoring or for filing Suspicious Matter Reports (SMRs) with AUSTRAC. |
Systems Failures Due to an Over-Reliance on Manual Methods
Outdated systems and a reliance on manual methods present a third major hurdle to compliance readiness. Many agencies continue to use spreadsheets, paper files, and email trails to manage their compliance obligations.
These manual processes are not only inefficient and time-consuming, but are also highly prone to human error and create inadequate audit trails for record-keeping.
This reluctance to modernise means many firms have not invested in appropriate technology to support their compliance efforts. There is a notable absence of effective software or IT solutions designed to automate and streamline key AML functions. These system inadequacies include a lack of tools for:
| Area of System Inadequacy | Specific Function Lacking |
|---|---|
| Automated Identity Verification | Tools for automating Know Your Customer (KYC) checks. |
| Client Screening | Software is used to screen clients against sanctions lists and databases of politically exposed persons (PEPs). |
| Real-Time Monitoring | Systems are used to monitor transactions in real-time to detect unusual patterns indicative of illicit activity. |
| Secure Record-Keeping | Digital solutions for securely storing compliance records for the mandatory seven-year period. |
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Your Agency’s AML/CTF Compliance Action Plan
Appoint a Dedicated AML/CTF Compliance Officer
A crucial first step in meeting your new compliance obligations is to appoint a dedicated AML/CTF Compliance Officer. This individual must be a senior staff member with the authority to oversee and implement your agency’s AML program effectively.
The Compliance Officer will be the primary liaison with AUSTRAC and hold ultimate responsibility for the firm’s compliance. Their role is comprehensive and central to your agency’s AML/CTF framework.
Their duties include:
- Overseeing the development, implementation, and ongoing maintenance of the AML/CTF program
- Conducting the agency’s money laundering and terrorism financing risk assessment
- Ensuring all staff are adequately trained on their compliance obligations and can identify red flags
- Managing the reporting of SMRs and Threshold Transaction Reports (TTRs) to AUSTRAC
- Keeping senior management and the board informed about the effectiveness of the AML/CTF program and any compliance issues
Develop & Implement a Tailored AML/CTF Program
Your real estate agency is required to develop and implement a written AML/CTF program that is tailored to the specific risks your business faces. A generic, off-the-shelf template is insufficient; the program must be based on a formal risk assessment that identifies your agency’s unique vulnerabilities to money laundering and terrorism financing.
This assessment should consider factors like your client base, the types of properties you sell, and the geographic locations you operate in.
The AML/CTF program is typically structured in two parts:
| Program Part | Description and Focus |
|---|---|
| Part A | Outlines the agency’s overall approach to managing risk, detailing internal policies, procedures, and controls for governance, employee due diligence, and staff training. |
| Part B | Focuses on Customer Due Diligence (CDD), establishing the procedures for identifying and verifying clients and their source of funds before providing a designated service. |
Complete Your AUSTRAC Enrolment & Prepare for Reporting
Before the 1 July 2026 deadline, your agency must formally enrol with AUSTRAC as a “reporting entity.” The online enrolment portal will be open between 31 March 2026 and 29 July 2026. Failing to enrol on time can result in significant daily fines, so it is vital to complete this step within the specified window.
Once enrolled, your agency will have ongoing reporting obligations to AUSTRAC. These reporting duties are a core component of the financing regime and include:
| Report Type | Description and Trigger |
|---|---|
| Suspicious Matter Reports (SMRs) | Must be filed if you have reasonable grounds to suspect that a client, transaction, or activity is related to money laundering, terrorism financing, or another serious crime. |
| Threshold Transaction Reports (TTRs) | Must be submitted for any property transaction. |
Institute Ongoing Staff Training & Schedule Independent Reviews
Achieving AML/CTF compliance is an ongoing commitment, not a one-off project. Your agency must establish a continuous staff training program to ensure every team member understands the risks of money laundering and their role in preventing it.
This training should be role-specific, regularly updated to reflect new threats or regulations, and include practical examples of red flags associated with a property transaction.
Moreover, your AML/CTF program must be subject to periodic independent reviews to make sure its ongoing effectiveness and compliance with the law. These reviews, typically conducted every two to three years, provide an objective assessment of your systems and controls, identify any weaknesses, and recommend improvements.
The Severe Consequences of Non-Compliance
The Substantial Financial Penalties for Breaches
Failing to adhere to the new AML/CTF obligations can lead to substantial financial penalties that pose a significant risk to any real estate agency. AUSTRAC has the authority to issue severe civil penalty orders for non-compliance, reflecting the seriousness of these legislative requirements.
For corporations, these penalties can be as high as $33 million for each contravention. The financial repercussions extend to specific compliance failures, with significant fines for neglecting core duties.
These penalties can include:
| Type of Breach | Potential Penalty |
|---|---|
| Failure to Enrol | Daily fines of up to $19,800 for a business. |
| Inadequate AML/CTF Program | Can result in multi-million dollar fines. |
| Reporting Failures | Missing a single Suspicious Matter Report (SMR) can lead to a penalty of up to $7.8 million. |
It is crucial to understand that these penalties can accumulate rapidly, as each breach is often treated as a separate violation.
While enforcement against the real estate sector is new, AUSTRAC’s history with other reporting entities demonstrates a firm approach to systemic compliance failures. Notable examples include Westpac’s $1.3 billion penalty and Crown Resorts’ $450 million penalty.
Potential Criminal Liability & Reputational Damage
Beyond the severe financial penalties, non-compliance with the financing regime exposes real estate professionals to the most serious consequences, including potential criminal liability. For the most serious money laundering offences, individuals can face life imprisonment under the Criminal Code Act 1995 (Cth).
The Anti-Money Laundering and Counter-Terrorism Financing Act 2024 (Cth) also reinforces board-level accountability, meaning executive liability for governance failures is a distinct possibility.
Furthermore, the reputational damage from a compliance breach can be devastating for a real estate agent. AUSTRAC often publicises its enforcement actions, and the public exposure of an agency being involved in or facilitating criminal activity can severely harm its brand and erode client trust.
In a profession where reputation is paramount, such damage can lead to:
- A significant loss of business
- Undermined the long-term viability of the agency
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Conclusion
From 1 July 2026, Australian real estate agents must navigate new AML/CTF obligations, a significant regulatory shift for which many are currently unprepared. By addressing common failures across people, processes, and systems with a clear action plan, your agency can effectively meet its compliance obligations and avoid the severe penalties associated with non-compliance.
Navigating these new requirements can be complex, but you do not have to manage it alone. Contact the specialists at AML House today to ensure your real estate agency is prepared for this new AML/CTF regime with our trusted expertise and tailored compliance solutions.
