AML/CTF Tranche 2 for Real Estate Sector in Australia

The new Tranche 2 landscape for real estate

Australia’s AML/CTF laws originally focused on financial institutions, casinos, remittance providers and bullion dealers. Real estate agents, lawyers and accountants were outside the core regime, which attracted criticism from FATF and domestic reviews because these “gatekeeper” professions are widely used to launder criminal proceeds.

The AML/CTF Amendment Act 2024 and the AML/CTF Rules 2025 extend the regime to a wider set of “Tranche 2” professions, including real estate professionals and property developers.

AUSTRAC now provides specific reform guidance for new industries, including a dedicated page for Real estate services (Reform), which explains:

• the new designated services

• how “real estate” is defined

• when an agency is considered to be brokering a sale or transfer

• the impact of being regulated.

You can read this guidance here:
Real estate services (Reform) – AUSTRAC

Who is covered under Tranche 2 for Real Estate?

Under AUSTRAC’s reform guidance, you are likely to provide designated real estate services if you:

• work as a buyer’s agent or seller’s agent

• operate a real estate business that brokers the sale, purchase or transfer of real estate

• are a property developer or similar business selling

  • house and land packages

  • apartments off the plan

  • blocks of land in new subdivisions

• sell or transfer real estate directly as a business, without using an independent real estate agent.

“Real estate” itself is defined broadly and includes freehold, long term leasehold interests and certain land use entitlements, both in Australia and overseas where there is a geographical link to Australia.

Lawyers and conveyancers who help plan or execute sales and transfers may fall under professional services designated services rather than the real estate category, but they still form part of the Tranche 2 reforms.

AUSTRAC’s “Check if you may be regulated” tool is the quickest way to confirm whether your firm is in scope:
Check if you may be regulated – AUSTRAC 

Timelines for Tranche 2 for Real Estate

The reform timetable is now clear and published.

Key dates for Tranche 2 for Real Estate are:

• Now until early 2026
  AUSTRAC is rolling out sector specific guidance and education to help newly regulated entities prepare their AML/CTF programs.

• 31 March 2026
  Changes for current reporting entities and virtual asset service providers commence. Enrolment opens for newly regulated industries from this date, although real estate obligations themselves begin later.

• 1 July 2026
  AML/CTF obligations commence for Tranche 2 entities, including real estate agents, buyer’s agents, property developers, dealers in precious metals and stones, lawyers, conveyancers, accountants and trust and company service providers.

• By 29 July 2026
  New Tranche 2 reporting entities must complete enrolment with AUSTRAC.

AUSTRAC’s Summary of obligations (Reform) sets out these dates and the associated enrolment requirements in more detail:
Summary of obligations (Reform) – AUSTRAC 

Core obligations for real estate firms under Tranche 2

From 1 July 2026, real estate firms that provide designated services with a geographical link to Australia must comply with the AML/CTF Act and Rules.

At a high level, you must be able to show AUSTRAC that your firm:

1. Enrols with AUSTRAC
   You must submit an enrolment application, provide key information about your business and keep those details up to date. For newly regulated designated services like real estate, you must enrol within 28 days of starting to provide a designated service and in any event by 29 July 2026.

2. Develops and maintains a tailored AML/CTF program
   Your AML/CTF program must be documented, approved by senior management and based on a firm wide assessment of money laundering, terrorism financing and proliferation financing risks. It must include policies, procedures, systems and controls for:

   • governance and roles

   • customer due diligence

   • ongoing monitoring and transaction monitoring

   • reporting

   • record keeping

   • training and independent review.

3. Assigns AML governance roles
   AUSTRAC expects you to identify a governing body, senior manager and AML/CTF compliance officer, even in small businesses, although one person may wear multiple hats in a micro business.

4. Conducts customer due diligence (CDD)
   You must identify and verify buyers, sellers and other customers, understand beneficial ownership and apply a risk based approach. This includes initial CDD, ongoing CDD and enhanced CDD for higher risk customers and transactions such as foreign politically exposed persons or complex structures.

5. Monitors transactions and behaviour
   Real estate firms must implement transaction monitoring that allows them to identify unusual or suspicious activity in client behaviour, funding patterns, ownership structures and settlement instructions.AUSTRAC+1

6. Reports to AUSTRAC
   You will need to lodge Suspicious Matter Reports, Threshold Transaction Reports for certain large cash transactions and relevant international funds transfer reports, where applicable.

7. Makes and keeps records
   AUSTRAC expects you to retain records of CDD, risk assessments, the AML/CTF program, training and all relevant transactions for specified minimum periods.

These elements apply broadly across Tranche 2 for Real Estate, regardless of whether you are a small residential agency or a large national developer. The scale and complexity of your controls can be proportionate to your risk, but every regulated business needs each of these building blocks in place.

Money laundering, terrorism financing and PF risks in real estate

AUSTRAC’s Money laundering national risk assessment and dedicated risk insights for the real estate sector describe property as a high risk channel for laundering illicit funds and hiding the proceeds of crime.AUSTRAC

Real estate is attractive because:

• it absorbs large values in a single transaction

• it can generate rental income and capital gains

• it can be geared or used as collateral for further borrowing

• it offers a sense of legitimacy for criminals and corrupt officials.

AUSTRAC’s risk insights highlight a number of typical vulnerabilities:

• use of complex companies and trusts that hide beneficial ownership

• third parties buying or holding property on behalf of someone else

• non resident buyers with limited connection to Australia

• unexplained wealth, especially where the buyer has a low apparent income

• use of cash or high risk payment methods to fund deposits or settlements

• property bought and sold quickly without a clear economic purpose

• cross border flows from high risk or sanctioned jurisdictions.

Even though AUSTRAC notes no specific terrorism financing or proliferation financing trends unique to real estate, firms are still expected to understand these risk environments and factor them into their risk assessment.

You can explore the official risk guidance here:
Risk insights and indicators of suspicious activity for the real estate sector – AUSTRAC 

Red flags for ML/TF/PF in the real estate sector

The AUSTRAC guidance gives a wide range of specific indicators which you can weave directly into your internal procedures and staff training.

Customer behaviour red flags

You should pause and reassess risk if a client:

• avoids meeting you in person without a clear reason

• is secretive or evasive, particularly about their identity or who they act for

• appears to follow instructions from a third party who is not clearly involved in the transaction

• ends the relationship when you request additional information or documentation

• asks for shortcuts or tries to rush the transaction in a way that bypasses normal checks.

Customer profile red flags

Risk may be heightened where:

• the lifestyle or apparent wealth of the customer does not match what you know of their job or business

• a large purchase is made by a business with little or no real trading activity

• a complex structure such as a shell company or trust is used for a residential property without good reason

• the client is a politically exposed person or closely linked to one

• adverse media links the client or their associates to fraud, corruption, tax evasion or organised crime

• the client is from or connected to a high risk jurisdiction or one with weak AML controls.

Transaction and funding red flags

Common red flags in Tranche 2 for Real Estate include:

• use of large cash payments, especially for deposits or instalments

• inability or refusal to explain source of funds or wealth

• use of private lenders, third party transfers or complex loans without commercial logic

• payment of more than market value or willingness to accept significantly below market value

• back to back purchases and sales with increasing prices over a short time

• frequent changes to instructions around deposits, refunds or distribution of sale proceeds

• requests to pay sale proceeds to seemingly unrelated third parties

• payment in foreign currency without a clear link to that country.

Delivery channel and foreign jurisdiction risks

Red flags also arise in the way services are delivered:

• insistence on completing processes entirely online where face to face contact would be normal

• minimal contact details or reliance on messaging apps only

• use of third parties to distance the actual buyer or seller from the transaction

• buyers who purchase property they have never inspected

• overseas buyers in high risk jurisdictions, especially where funds come from banks or counterparties in those locations.

Real estate agencies should integrate these indicators into checklists, CRM fields and training so that agents can recognise patterns early and escalate them to the AML/CTF compliance officer.

Best practices for real estate brokers and property firms

To comply with Tranche 2 for Real Estate without paralysing your business, it helps to think beyond the minimum rules and aim for simple, repeatable practices.

Start with a realistic ML/TF/PF risk assessment

An effective AML/CTF program is built on a documented risk assessment that covers:

• customer types

• product and service types

• delivery channels

• geographic exposure

• any reliance on third parties and referrers.

For a real estate business this may include risk scoring by:

• transaction type, for example established residential, off the plan, commercial

• customer type, for example resident individual, foreign buyer, company, trust

• funding method, for example bank finance, related party loans, cash.

The output should directly inform your due diligence requirements and internal approvals.

Design a simple, usable AML/CTF program

Your written program should be short enough that staff can use it, yet detailed enough for AUSTRAC. It should include clear sections on:

• roles and responsibilities

• how you onboard new clients

• when and how you identify beneficial owners

• how you risk rate customers and trigger enhanced due diligence

• what you monitor, how and how often

• what qualifies as a red flag and when to lodge an SMR

• record retention rules and how records are stored.

It can be helpful to add flow charts and checklists for typical scenarios such as:

• local residential purchase financed by an Australian bank

• non resident buyer purchasing an off the plan apartment

• related party transfer of property for little or no consideration.

Strengthen KYC and beneficial ownership checks

Real estate agents will often be dealing with companies and trusts, not only individuals. Societies, charities and offshore structures can also appear. AUSTRAC provides specific guidance on identifying beneficial owners and assessing foreign jurisdictions.

Good practice includes:

• always identifying beneficial owners, not just directors or trustees

• collecting trust deeds and company registers for higher risk structures

• screening customers and beneficial owners against sanctions and PEP lists

• asking specific questions about source of funds and source of wealth, not just proof of identity.

Embed training and a strong compliance culture

Staff must understand why Tranche 2 for Real Estate matters, not only what to do. Training should cover:

• the basics of money laundering, terrorism financing and proliferation financing

• how criminals misuse property transactions

• the firm’s risk appetite and risk assessment

• customer and transaction red flags

• how to escalate concerns confidentially.

AUSTRAC is developing AML/CTF education resources and starter kits for Tranche 2 sectors, particularly small businesses, to make this easier.

Use technology wisely

AML solutions that integrate with your CRM or property management systems can reduce manual work and improve consistency. At a minimum, consider tools that support:

• electronic identity verification

• beneficial ownership lookup

• sanctions and PEP screening

• workflow for approvals, SMR decisions and audit trails.

The key is to match the solution to your business size and risk profile. Over complicated systems can be as damaging as no system at all.

Common challenges real estate firms face under Tranche 2

Based on our experience with Tranche 2 for Real Estate and other DNFBP sectors, firms often encounter similar obstacles.

Balancing speed of deals with compliance

Agents and developers are under commercial pressure to move quickly. There is a perception that AML checks will “slow everything down”. The challenge is to:

• embed checks into existing milestones such as listing, offer acceptance and contract exchange

• use pre populated templates and digital onboarding to reduce friction

• communicate early with clients about documentation requirements so there are fewer last minute surprises.

Fragmented processes across networks

Franchise groups and multi branch networks often have variations in how they handle client onboarding and deposits. Under Tranche 2 for Real Estate, AUSTRAC will expect consistency of AML controls across the group. This requires:

• group level policies that allow some flexibility but set minimum standards

• central oversight by an AML/CTF compliance officer

• periodic internal reviews of branches with higher risk profiles.

Limited internal capacity and expertise

Many agencies rely on lean administration teams and may not have people with prior AML experience. Building an AML/CTF program entirely in house can be overwhelming. This is where starter kits, AUSTRAC’s sector guidance and external Tranche 2 consultants become important.

Dealing with foreign buyers and complex structures

Foreign buyers, nominees, complex company and trust structures and cross border funding introduce additional risk and complexity. Real estate staff must be confident to pause a deal, request further information and escalate concerns without feeling they are “killing” the transaction.

How Tranche 2 consultants can help your real estate firm

As a specialist Tranche 2 consultancy, our role is to help real estate businesses move from uncertainty to clear, practical AML compliance that supports growth.

A typical engagement may include:

• Regulatory scoping and readiness review
  We map your current services against AUSTRAC’s designated services and confirm whether and how Tranche 2 for Real Estate applies to your firm.

• ML/TF/PF risk assessment tailored to property
  We conduct or refine your enterprise wide risk assessment, using AUSTRAC’s real estate risk insights and national risk assessments as a baseline, then overlaying your specific customer, product and geographic profile.

• Design of an AML/CTF program that fits your operations
  We develop a complete AML/CTF program that incorporates governance, due diligence, monitoring, reporting, record keeping and training, aligned with AUSTRAC’s program guidance.

• Process and template build
  We translate the program into onboarding checklists, client questionnaires, source of funds templates, escalation forms and SMR decision records that your teams can actually use.

• Technology strategy for Tranche 2 for Real Estate
  We help you evaluate and implement RegTech solutions that integrate with your CRM, ensure consistent KYC and screening and provide the audit trail AUSTRAC expects.

• Training and change management:
  We deliver targeted training for principals, sales staff, property managers and support teams, using examples drawn from AUSTRAC’s red flag indicators for the real estate sector.

• Ongoing advisory support
  We stay alongside you through the first year of Tranche 2, helping to triage difficult cases, refine your risk assessment and respond to regulatory developments.

The aim is simple. We help you meet your obligations, protect your licence and reputation, and make Tranche 2 for Real Estate part of how you run a professional, trusted property business