In our previous edition, we provided an overview of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Tranche 2 reforms and the legislative context underpinning them. As the new reform is soon taking place, this newsletter is intended as a practical guide to assist clients in understanding what these obligations mean in the context of their property transactions, effective 1 July 2026.
Overview of Changes Applicable to Clients
Under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024, real estate agents, buyers’ agents, conveyancers, and property developers selling directly to purchasers are now classified as reporting entities under the AML/CTF Act. This classification imposes mandatory Customer Due Diligence (CDD) obligations, which require the identification and verification of all parties to a property transaction prior to the provision of services.
These requirements apply to both purchasers and vendors and extend to any entities, including companies, trusts, and self-managed superannuation funds, through which property is acquired or sold.
Verification Information Required from Clients
1. Proof of Identity
All clients will be required to provide satisfactory evidence of identity prior to the commencement of a transaction. Acceptable documentation includes:
- A current, government-issued photographic identity document (passport or driver’s licence)
- Evidence of current residential address (such as a utility notice, local council rates notice, or bank statement dated within three months)
- Full legal name, date of birth, and residential address
Verification may be completed in person, via certified copies of documents, or through an approved digital identity verification service, as determined by your agent or conveyancer.
2. Source of Funds
Clients will be required to provide documentary evidence of the source of funds to be applied to the purchase. The nature of documentation required will vary according to the origin of the funds. Common examples include:
- Personal savings: bank account statements demonstrating the accumulation of funds over time
- Proceeds from the sale of a prior property: a copy of the executed contract of sale or settlement statement
- Inheritance or gifted funds: a statutory declaration or written confirmation from the estate or donor
- Business income or distributions: financial statements or a letter from a qualified accountant
- Funds sourced from overseas: documentation evidencing the transfer and origin of those funds
The extent of inquiry into the source of funds will be proportionate to the risk profile of the transaction. Clients with straightforward financial structures are unlikely to encounter significant additional requirements beyond standard documentation.
3. Beneficial Ownership: Trusts, Companies and Other Entities
Where a client intends to purchase property through a corporate entity, discretionary or family trust, self-managed superannuation fund, or other structured arrangement, additional documentation will be required to identify the ultimate beneficial owner(s) and any persons exercising control over the entity. This may include:
- A certified copy of the relevant trust deed or corporate constitution
- An ASIC company extract confirming current directorship and shareholding
- Proof of identity for all trustees, directors, and authorised signatories
- Financial statements or other evidence of the entity’s source of funds
Clients intending to transact through an entity structure are encouraged to contact our office in advance so that the necessary documentation may be prepared prior to engagement.
4. Politically Exposed Persons (PEPs)
Clients will be asked to disclose whether they, or any immediate family member or close associate, currently hold or have previously held a prominent public or political position, whether in Australia or internationally. This inquiry is a standard requirement under the AML/CTF framework and does not preclude a client from proceeding with a property transaction. Where a client is identified as a Politically Exposed Person, enhanced due diligence measures will apply in accordance with legislative requirements.
5. Ongoing Monitoring Throughout the Transaction
In accordance with the risk-based nature of the AML/CTF regime, reporting entities are required to monitor transactions on a continuous basis throughout their lifecycle. Should material changes arise, including amendments to the purchasing entity, unusual variations in payment arrangements, or changes to ownership structure, clients may be asked to provide updated or supplementary documentation. This obligation is of particular relevance to off-the-plan transactions, where the period between exchange and settlement may extend over several months or years.
Non-Provision of Required Information
Reporting entities are legally prohibited from providing designated services where the required customer due diligence cannot be completed. In the event that a client is unable or unwilling to furnish the documentation specified, agent or conveyancer may be required to suspend or decline to proceed with the engagement.
Clients with concerns regarding the handling, storage, or confidentiality of their personal information are encouraged to request a copy of the relevant privacy and data security policies from their agent or conveyancer.
Anticipated Impact on Transaction Timelines
For the majority of standard residential transactions involving straightforward ownership structures, the identity verification process is expected to be completed within 24 to 48 hours, provided that all required documentation is submitted promptly. However, clients should be aware that more complex transactions, particularly those involving corporate or trust structures, offshore purchasers, or transactions of significant value, may be subject to a more complex process and additional time may be needed.
Industry bodies have noted that compliance obligations under the new regime may add both time and cost to certain transactions. Clients are accordingly advised to prepare and collate their documentation at the earliest opportunity and to respond promptly to any requests for information issued by their agent or conveyancer.
Our Commitment to Clients
Our office has undertaken comprehensive preparation in advance of the 1 July 2026 commencement date, including staff training in AML/CTF compliance obligations and the implementation of updated client onboarding procedures. We are committed to conducting the required verification process in a manner that is transparent, respectful of client privacy, and as administratively efficient as possible.
Clients will be informed of the purpose of any documentation request and how their personal information will be stored and, where required by law, reported.
We encourage clients with forthcoming transactions to contact our office at the earliest opportunity to discuss their specific circumstances and ensure that all necessary documentation is in order prior to commencement with any property-related matter.
Contact Migrations Affairs to speak with our property experts for tailored advice on the circumstances and eligibility.
📧 info@migrationaffairs.com.au
🌐 migrationaffairs.com.au/contact
📞 +61 2 8226 8777