AML/CTF: Real Estate Faces New Rules – Early Prep is Key
The real estate industry, a cornerstone of the global economy, is facing a significant regulatory transformation with the imminent implementation of new Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) rules. Set to come into force on July 1, 2026, these reforms impose a comprehensive compliance regime on real estate agents and property developers, marking a pivotal step in Australia’s efforts to address financial crime risks in the property market.
Background: Why Real Estate Is a Focus of AML/CTF Regulations
Real estate transactions have long been recognized globally as a potential avenue for laundering illicit funds due to the high value and complexity of property deals. Criminal entities exploit the property sector to layer and integrate dirty money, concealing the origins of illicit wealth while artificially inflating property prices, which can negatively impact market integrity and legitimate buyers’ access to affordable housing.
In Australia, legislative reforms passed in late 2024 have officially designated real estate agents and property developers as ‘Tranche 2’ reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. This classification subjects them to a newly expanded set of obligations aimed at detecting and disrupting money laundering (ML) and terrorism financing (TF) activities within the sector.
Who Is Affected Under the New AML/CTF Rules?
The reforms explicitly cover businesses engaged in:
- Brokering the sale, purchase, or transfer of real estate on behalf of buyers, sellers, transferees, or transferors as part of their business activities.
- Selling or transferring real estate directly to customers without the use of independent real estate agents, including property developers who conduct direct sales of house and land packages, apartments off the plan, or vacant land in new subdivisions.
Both categories target what qualifies as ‘real estate’ dealings, emphasizing the role of brokerage and direct sales in the regulatory framework. Consequently, many real estate agents and property developers will need to comply with AML/CTF obligations for the first time from mid-2026, expanding the financial transparency expectations in the industry.
Core AML/CTF Obligations for Real Estate Businesses
The AML/CTF regime equips Australian Transaction Reports and Analysis Centre (AUSTRAC) with tools to monitor and investigate suspicious transactions. Reporting entities in the real estate sector must undertake key responsibilities, including:
- Risk Assessment: Carrying out thorough ML/TF risk assessments to identify vulnerabilities within their designated services and customer base.
- AML/CTF Program Implementation: Developing, implementing, and maintaining a tailored AML/CTF program, including policies, procedures, and controls proportionate to the identified risks.
- Customer Due Diligence (CDD): Conducting initial and ongoing due diligence to verify customer identities, assess risks, and monitor transactions for suspicious activity.
- Transaction Reporting: Reporting any suspicious matters or certain threshold transactions to AUSTRAC as required by law.
- Record Keeping: Maintaining detailed records of client transactions and AML/CTF compliance activities for specified periods.
These requirements are designed to foster transparency, enhance market integrity, and support law enforcement in tracing illicit financial flows linked to terrorism, corruption, and organized crime.
Preparation Is Crucial: Steps for Early Compliance
While the formal rules and detailed guidance are slated for finalization by October 2025, with a starter compliance program from AUSTRAC expected by December 2025, industry experts emphasize the necessity for early preparation to meet the July 2026 deadline confidently. Early proactive engagement can mitigate the risk of non-compliance, hefty fines, and reputational damage.
Key preparatory steps include:
- AUSTRAC Registration: Real estate businesses should enroll with AUSTRAC as soon as possible to begin fulfilling regulatory requirements.
- AML/CTF Program Development: Designing comprehensive AML/CTF policies and procedures tailored to the business’s specific activities and risk profile.
- Staff Training: Conducting foundational AML/CTF training seminars for all employees, including agents, principals, and administrative staff, to ensure awareness and understanding of obligations.
- Risk Assessment: Auditing existing products, services, and client interactions to ascertain the scope of designated services and assess current risks.
- Monitoring and Reporting: Establishing effective systems for ongoing customer due diligence, transaction monitoring, and suspicious matter reporting.
Specialist legal and compliance advisory firms recommend that all real estate businesses seek expert guidance to navigate the complex landscape effectively and optimize implementation strategies early.
Industry Perspectives and Challenges Ahead
The move to classify real estate professionals as AML/CTF reporting entities has been met with mixed reactions within the sector. While acknowledging the rising necessity to combat financial crime, some industry representatives express concerns about the potential compliance costs and operational complexities.
However, sector leaders recognize that robust AML/CTF compliance is essential not only for legal adherence but also for preserving the sector’s reputation and securing consumer confidence. Experts highlight that well-prepared businesses may even gain a competitive advantage by demonstrating commitment to integrity and responsible business practices.
Government and Regulatory Outlook
The Australian government’s decision to extend AML/CTF obligations to real estate is part of broader reforms targeting high-risk sectors prone to ML/TF activities. Through AUSTRAC, the authorities will increase oversight, provide sector-specific guidance, and offer compliance programs to facilitate a smoother transition for newly regulated entities.
The reforms aim to disrupt a $60 billion estimated dirty-money flow through property, securing the real estate market against criminal exploitation and protecting the wider economy.
Conclusion
The AML/CTF reforms represent a landmark regulatory shift for the real estate sector, setting a new standard of accountability beginning July 2026. Real estate agents, property developers, and related businesses must recognize the urgency of early preparation to embed effective AML/CTF measures. By proactively engaging with the new rules, real estate professionals can not only avoid penalties but also contribute positively to the integrity and transparency of the industry.
AML Editor’s article was originally published in realestatebusiness on 01 September 2025